For a book that’s not a novel, this book was a pleasant surprise to read. It was not boring at all and as such I read it in two days. Warren was very successful in making difficult concepts easy to understand and I now get why the book is so repetitive. If you are hearing concepts for the first time, or are a recent learner of a particular subject, you may want to hear it in a number of ways and the book dishes that up plain and simple. I want to do another round of it but I’m already lagging behind on my one-book-a-month plan for 2018 so it will have to be reread once a year until I make my own million :). I will buy this book for others as a gift. That’s how much I loved it. Oh did I also mention that all proceeds from the book go to Serendipity Trust? A fund that Warren and his wife, Vanessa started to put children through school.
This book is a successor of his premier, Become your own Financial Advisor, which I am reading right now. So, most of us want to be millionaires right? Or if not millionaires, financially independent whatever that means for each of us but how much are we willing to sacrifice in order to achieve that? Not all of us are savers. In fact the statistics on saving culture in South Africa are shocking and even more shocking is our debt levels. We have all this information nowadays but for some reason we are still making bad financial decisions that are landing us in trouble and hope that we will win the lotto and become overnight millionaires – well, let me not generalize. I had that hope alas! 😂
I am not a financial guru so my understanding of what I read in this book is this… There is a difference between saving and investing. If one is a regular saver, they are already on their way and must be commended. So, saving, typically in a bank does not yield one in the long term the kind of rewards or interest that beat inflation. Inflation being the ratio between what the amount you have buys you now vs what the same amount will buy you in future. So, if R15 can buy you a loaf of bread today, and in 5 years time bread is R18, if you keep your R15 under a mattress, you’ll still have the R15 but it will not buy you bread anymore at that price. I hope I make sense. I am describing the concept to myself in my head as I am typing.
So then, in order to build wealth, one has to grow their assets in such a way that it beats inflation hence keeping all your assets in cash is according to Warren, other investors and common sense, may not be the best way to grow one’s wealth. Additionally, to grow your wealth, your assets have to be spread over a number of portfolios, something called asset allocation. There are as I’ve come to learn from this book, a number of asset classes where one can spread their money, 5 of which are explained in the book;
⁃ Listed Property (shares in companies that own property, e.g malls)
⁃ Equity (shares)
⁃ Residential property (i.e residential rentals)
I have 1 residential property that I have rented out as an investment and my plan was to add a few more. A strategy that I have now revised after reading the book. Get the book and understand the advantaged and disadvantages of having a rental property and the advantages and disadvantages of buying shares from a company that owns properties and decide for yourself – something I am now looking at. If you’re anything like me :), you may have thought that being a millionaire meant one has six zeroes in their bank account. It may very well be so, but does not always have to be like that. One can be a millionaire from a combination of the above asset classes. The book then goes into detail explaining each assets class, recommendations on the spread ratios, meaning how much percentage to have on each class and how to start investing. The books offers recommendations based on research but one can make their own determinations and decisions.
What I also loved from the book were the stories of 8 people featured who shared their own testimonies of how they made their first million. So I was tempted to go straight to chapter 8 when I first got the book, but I’m glad I read it chronologically and when I got to the testimonies, I had the background to understand. Theory is one thing but hearing stories of live people is another. The last chapter also focused on advice from people who have created riches and wealth and it was amazing to read that for most of them, the focus wasn’t money but the value and purpose behind it. In essence, money is what you spend and value is what you get back.
The book does not only focus on finances which I think is such a welcome surprise. Although the book is about money, I got so much out of it non related. The lessons can be replicated in one’s health and fitness goals, your spiritual goals and careers or passions. He forces you to think beyond money and ask yourself why you want to build wealth. What are the objectives or motives? What are the causes you want to support or what are the dreams you wish to explore? What is your life’s vision? No vision, no results. Indeed people perish for lack of knowledge hey. Just read the book. I will come back for the review of his first book as soon as I am done with it.
In sum, discipline and consistency are the two main ingredients of growing wealth over the long term and I have begun my own journey of getting there in 10 years. I hope to be one of those who will look back in 10 years time and say, I did the work, and the results show for themselves.