Five Financial Books to Read Before Turning 30

Five Finance Books Everyone Should Read
Before Turning 30:
A Discussion of Money, Management &
Personal Finance
Dr. Adam Shisler
2011-12 ASDA President
‘12 University of Texas School of Dentistry
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Disclaimer
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Books?
• Why books?
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Fab Five Titles
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The Millionaire Next Door
The Investment Answer
I Will Teach You to be Rich
Trifecta
– Get Rich Slowly
– Financial Samurai
– The Simple Dollar
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Shisler’s Swanky Six
•
•
•
•
The Millionaire Next Door
The Investment Answer
I Will Teach You to be Rich
Trifecta
– Get Rich Slowly
– Financial Samurai
– The Simple Dollar
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The Millionaire Next Door
Thomas J Stanley, PhD
William D Danko, PhD
• Doesn’t promise to show you how to become a
millionaire, but more defines wealth.
• Based on research, case studies and statistics it profiles
those who are already millionaires and you draw
conclusions.
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Equation of Wealth
• UAW vs PAW
– Under Accumulator of Wealth
– Prodigious Accumulator of Wealth
• Net Worth =
(AGE * PRE-TAX INCOME * 10%)
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Many people who earn high incomes
are NOT rich
High Income
Low Income
Frugal WEALTHY
Breaking Even (Spartan)
Spender
Breaking Even (Lavish)
BROKE
In order to be rich: You’ve got to play good OFFENSE and DEFENSE
Translation: earn a lot, develop frugal habits #NLC15
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Snapshot of Wealthy
• 80% of America’s millionaires
are FIRST-generation rich
• 20% of millionaires are retired
• 50% of millionaires own a business
• On average, millionaires invest 20% of their household
income each year.
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Common Denominators
• Live well below your means
• Allocate time, energy, and money efficiently
• Financial independence more important than displaying high
social status
• No economic outpatient care from parents
• No economic outpatient care to children
• Proficient in target marketing opportunities
• Choose the right occupation
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Inverse Relation of Dr.’s
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Dr’s are TWICE as likely to be a UAW than a PAW1
Two reasons:
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Professions require advanced degrees, individuals get a delayed start in the
accumulation race. Most of the income during these educational pursuits is used to fund
tuition, housing, and student loans rather than investment.
American society has prescribed a lifestyle to these professions. Doctors are expected
to live in an upscale neighborhood with multiple cars, a boat, and other luxury items.
High Income
Low Income
Frugal WEALTHY
Breaking Even (Spartan)
Spender
BREAKING EVEN (LAVISH)
BROKE
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Shisler’s Sentence Summary
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The Investment Answer
Daniel C Goldie, CPA, CFP
Gordon S Murray
• Jargon-free for all investors--experienced, beginner, and
everyone in between--The Investment Answer distills the
process into just FIVE DECISIONS.
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The Five Investor Decisions
• The Do-It-Yourself Decision
– Use a broker or don’t
• The Asset Allocation Decision
– Risk vs. Return
• The Diversification Decision
– Mix of assets in your portfolio
• The Active vs. Passive Decision
– Do you want an active or passive investing approach
• The Rebalancing Decision
– When to rebalance, how to judge performance. #NLC15
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Shisler’s Sentence Summary
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I Will Teach You to be Rich
Ramit Sethi
• The book for the materially ambitious yet financially
clueless.
• 6-week personal finance program for 20-to-35-year-olds.
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By failing to prepare,
you are preparing to fail
• The single most important factor to getting rich
is getting started, NOT being the smartest in the room.
• One of the key differences between rich people and everyone
else is that rich people plan before they need to plan.
• More is lost from indecision than bad decisions
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Conscious Spending Plan
• His definition of FRUGALITY:
– Choose the things you love enough to spend extravagantly on ‐‐ and then cut mercilessly the things you don’t love. Fixed Costs
Rent, Utilities, Debt, etc. 50‐60% of take‐home pay
Investments
401(k), Roth IRA
Savings
Vacations, House DP, Emergency Fund
Guilt‐Free Spending Money
Dining, Going out, Shopping
10%
5‐10%
20‐35%
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Ladder of Personal Finance
• Rung 1
– Invest to take full advantage of employer match 401K,
this is free money and there is, quite simply, no better deal
• Rung 2
– Pay off debt (credit/student)
• Rung 3
– Open up a Roth IRA, contribute the most until you make too much
• Rung 4
– If you have any money left over, go back and max your 401K ($18K/annual)
• Rung 5
– Still money left? Open a regular nonretirement account and put as much as possible there. #NLC15
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Shisler’s Sentence Summary
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Trifecta the Blogosphere
• Why Blogs?
– Handy
– Micro‐snippets of digestible advice
– Rome wasn’t built in a day, neither was my bank account #NLC15
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J.D. Roth
• Best blog by Time
• Most inspiring money blog by Money
• Core Values:
– Money is more about the mind than the math
– Spend less than you earn
– Plan, Have Goals, Do what works for you
– Do it now
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Sam Dogen
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http://www.thesimpledollar.com/onepage/
Trent Hamm
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http://www.thesimpledollar.com/onepage/
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http://www.thesimpledollar.com/onepage/
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How do I use blogs?
• Start my day with…
– http://www.financialsamurai.com/
• When I’m bored…
– http://www.thesimpledollar.com/
• When I need a reference, template, research…
– http://www.getrichslowly.org/blog/
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Who’s on my team?
• Electronic Budget Tool
– Mint, Personal Capital, Quicken
• CPA/CFP
– Referred by fellow Pediatric Dentist
• Spouse / Partner
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Final Thoughts
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