The Retirement Book Post

4-steps-3d

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Much of my life has been taken up by time reading anything finance-related I could get my hands on.  Sometimes this is a simple investment book or the autobiography of some famous CEO.  Sometimes it’s the annual meeting notes of a hedge fund manager or the annual report of a conglomeration I’m thinking of investing in.  Recently, it has been blog posts and podcasts on starting an online small business more often than not.

Aside from my own sub-$10k portfolio, a few retirement accounts for family members and whatever knowledge I utilize in my day job underwriting small business loans I haven’t made much use of this habit.  So I decided to take some time to make a plan to put whatever info I have gleaned to good use and try to get rich.

Eventually this turned into an eBook with a fun name: 4 Steps to Retiring a Millionaire (Plus 4 More Steps to get Even Richer).  The book starts with the requisite basic personal finance lessons.  Stuff like compound interest, how to use credit cards and whether you should buy or rent your house.

Most of these things come second nature for those who have had concepts like the time value of money or return on capital beaten into to their brain for four years of undergrad and another year of grad school.  But, if you went to school for English, or engineering or manage the KFC where you started working in high school it’s likely there was never much of a reason to think through how to save money and where to put it.

Next, we go into how to increase your income.  No one has ever become rich (at least not unless it took them 50 years) by savings $12 more per week.  The way you get rich is by creating new income sources and increasing the income you get from your current sources.  This can mean buying rental properties, getting a raise at your current job, starting a lawn maintenance business to run on the weekends or even writing eBooks.  There more income sources you have the better chance you won’t have rely on inflation level raises to retire comfortably.

To complete the first half of the book, intelligent asset allocation is discussed.  Anyone can buy a CD or start a brokerage account and invest in an index fund and the company their uncle works for.  The challenge is creating a diversified portfolio where when the stock market is crashing or even just remaining stagnant for years on end the portfolio continues to appreciate because other asset classes pull their weight.

The next four steps are the exciting ones.  Well, there are three exciting ones and then one about using debt which is more common sense than exciting.

The first is actively investing.  Active investing will be a big focus on this website.  I will track my own portfolio, which has both long-term investments and speculations as well as actively manage a portfolio established in my first book, How to Hack Wall St.  There are people with a talent for active investing who can increase the return they see with smart asset allocation by 50% or more and I discuss some strategies to achieve this.  Unfortunately, these people are few and far between and even worse it takes a lot of work to consistently produce satisfactory investment results – so I also talk about sectioning of portions of the total portfolio to use on different strategies while leaving portions to passive management.

The richest you will get is by starting a successful business.  Unless you are part of the vast minority of people who can command a 7-figure salary (plus stock options) starting a business will create more straight cash than getting a raise, or being frugal, or investing in value stocks could dream of.  I don’t have a secret sauce on starting a business.  If I did my website would look a lot nicer.  But I work with small business owners every day in my day job and can speak to, on average, how and when you should start a business and how to make it successful.

The last section, ignoring the boring how to use debt stuff, talks about timing the market.  This part was the one I struggled with the most.  There are fundamental and technical indicators that help investors and speculators position themselves well in all markets, but none of them are perfect.  I talk about using both but never going all in.  Any market that has gone down 70% can go down 90% before it rebounds.

Portfolios

I will follow an asset allocation portfolio modeled on the section in the book on the website.  You can find that here.

I will also be putting together a market timing portfolio to continue to experiment with the concepts discussed in the book.  This portfolio will be established in my newsletter over time and then added to the portfolio page on the site.

Books

I recommended a helluva lot of books (only partially so I could make the Amazon commission on them if you buy them from this page), here’s the list:

Books to Read for Section 1

The Automatic MillionaireDavid Bach

Master the Money GameTony Robbins

Becoming Your Own BankerR. Nelson Nash

How Privatized Banking Really WorksRobert P. Murphy & L. Carlos Lara

50 Prosperity ClassicsTom Butler-Bowdon

Books to Read for Section 2

Automatic Wealth for Grads… and Anyone Else Just Starting OutMichael Masterson

Seven Years to Seven Figures: The Fast-Track Plan to Becoming a MillionaireMichael Masterson

Choose YourselfJames Altucher

The 4-Hour Work WeekTim Ferris

The Side Hustle Path: 10 Proven Ways to Make Money Outside of Your Day Job Vols 1 & 2 – Nick Loper

Stealth Income Strategies for InvestorsMark Morgan Ford

Kindle Bestseller SecretsDerek Doepker

How to Write for Kindle: A Non-Fiction Book in 72 Hours or Less – Nancy Hendrickson

Rich Dad, Poor DadRobert T. Kiyosaki

How to Write a Non-Fiction eBook in 21 DaysSteve Scott

How to Start a Successful Blog in One HourSteve Scott

Kindle Publishing PackageSteve Scott

Email Marketing BlueprintSteve Scott

My Blog Traffic Sucks! 8 Simple Steps to Get 100,000 Blog VisitorsSteve Scott

Books to Read for Section 4

Global Asset Allocation: A Survey of the World’s Top Investment StrategiesMeb Faber

Fail-Safe Investing: Lifelong Financial Security in 30 Minutes – Harry Browne

The Permanent PortfolioCraig Rowland & J.M. Lawson

The Gone Fishin’ PortfolioAlexander Green

The Ivy PortfolioMebane T. Faber & Eric W. Richardson

The Fundamental Index: A Better Way to Invest– Rob Arnott

Tomorrow’s Gold: Asia’s Age of DiscoveryMarc Faber

Unconventional SuccessDavid Swensen

Pioneering Portfolio ManagementDavid Swensen

When Markets CollideMohamed El-Erian

Berkshire Hathaway Letters to ShareholdersWarren E. Buffett & Max Olson

The Only Investment Guide You’ll Ever NeedAndrew Tobias

7Twelve: A Diversified Investment Portfolio with a Plan – Craig L. Israelsen

Rational Expectations: Asset Allocation for Investing AdultsWilliam J. Bernstein

The Only Guide You’ll Ever Need for the Right Financial PlanLarry E. Swedroe

The Little Book of Alternative InvestmentsBen Stein & Phil DeMuth

Distressed Debt AnalysisStephen G. Moyer

Investment BikerJim Rogers

Investing in REITsRalph L. Block

The Collapse of the Dollar and How to Profit From ItJames Turk & John Rubino

The Golden RuleJim Gibbons

Hot CommoditiesJim Rogers

Profiting from the World’s Economic CrisisBud Conrad

World Dominating Dividend GrowersDan Ferris

Books to Read for Section 5

The Choose Yourself Guide to Wealth– James Altucher

Ready, Fire, AimMichael Masterson

The Reluctant EntrepreneurMichael Masterson

Family FortunesBill Bonner

The Daily EntrepreneurSteve Scott & Rebecca Livermore

The Myth of the Robber BaronsBurton W. Folsom Jr.

How to Be a Billionaire: Proven Strategies from the Titans of WealthMartin S. Fridson

The DriverGaret Garrett

40 Alternatives to CollegeJames Altucher

How to be RichJ. Paul Getty

Ayn Rand and BusinessDonna Greiner

Books to Read for Section 6

The Focused Few – Richard M. Rockwood

The Art of Value Investing – John Heins & Whitney Tilson

The Essays of Warren Buffett – Warren Buffett & Lawrence Cunningham

The Outsiders: Eight Unconventional CEOS and Their Radically Rational Blueprint for Success – William Thorndike

Margin of Safety – Seth Klarman

The Little Book that Still Beats the Market – Joel Greenblatt

The Big Short: Inside the Doomsday Machine – Michael Lewis

Money Masters of Our Time – John Train

A Gift to My Children – Jim Rogers

Invest Like a Dealmaker– Chris Mayer

The Essential Buffett – Robert Hagstrom

Mosaic: Perspectives on Investing – Mohnish Pabrai

Applied Value Investing – Joseph Calandro

 

Shareholder Yield – Meb Faber

Books to Read for Section 7

The Value of DebtThomas J. Anderson

I Will Teach You to be RichRamit Sethi

Books to Read for Section 8

Irrational ExuberanceRobert J. Schiller

Global ValueMebane Faber

Lessons for a Young EconomistRobert P. Murphy

 

 

 

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