If you’ve been listening to personal finance podcasts this month, you’ve probably come across this chap (his surname is pronounced “ma-julie” btw) hawking his book. I was intrigued enough to get it after enjoying The Psychology of Money, which seems like a template for this book. Here are summaries of each chapter, as provided by the author in the final chapter:
- Saving is for the poor, investing for the rich. Focus on whichever is most appropriate to your place in the saving-investing continuum.
- Save what you can, depending on your stage in life, not a fixed percentage.
- Focus on increasing your income, rather than obsessing about cutting spending.
- Use the 2x rule to avoid guilt about spending. Every time you are tempted to splurge on something, do it only if you also put the same amount of money in future investments or to charity.
- Save at least 50% of your future raises. Some lifestyle creep is allowed.
- Debt isn’t good or bad, use it when it can be beneficial (like for paying for college or a mortgage)
- Only buy a home when the time is right.
- When saving for a big purchase, like a wedding or a car, use cash.
- Retirement is about more than money. What are you retiring to?
- Invest to replace your waning human capital with financial capital.
- Think like an owner. Buy assets that will generate future income.
- Don’t buy individual stocks. You’re unlikely to beat the market, and wouldn’t know it even if you did.
- Since markets generally go up, buy quickly, sell slowly.
- Invest as often as you can. Don’t try to time the market.
- Don’t fear volatility, that’s the price of earning returns.
- Market crashes are usually the best time to buy.
- Fund the life you need before you risk it for the life you want. Sometimes it’s OK to sell.
- Don’t automatically max out your 401k, you might need that money sooner.
- You’ll never feel rich, even when you objectively are.
- Time is your most important asset.
It’s worth reading if you want a little more specific information than was in The Psychology of Money and want to nail down the basics of personal finance. It’s US-centric, but only one chapter (on US tax-efficient savings) was skippable for non-US readers.
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No. 2 of 50 books I intend to read and review in 2022.
Patrick Sherriff is an Englishman who survived 13 years working for newspapers in the US, UK and Japan. Between teaching English lessons at my conversation school in Abiko, Japan, I write and illustrate textbooks for non-native speakers of English, release Hana Walker mystery novels, short stories, essays and a monthly newsletter highlighting good fiction published in English about Japan.