Rating: 4 / 5
It was my first book on the topic of personal finance. I am entirely new to managing money, so I thought it would be a good idea to gain some knowledge before trying anything crazy. I must say, this book has not disappointed me. I do not know, how other personal-finance books are written, but from my point of view, I learned a lot by reading this book. I have already implemented some of the ideas mentioned in this book.
One of the best things that I learned from this book is to automate everything. As a Computer Engineer, it is easily relatable. The author says that if you enable automatic transfers to transfer money from your checking account to different accounts, then you will not look at the money, and hence you will not have the urge to spend the money. A psychological win, isn’t it?
The author argues in favor of passive investment - the buy and hold strategy. One of the main takeaways from this book was just to get started. The author shows that it is better to do something 85% right than to wait for a long time to gain perfection. Especially in the case of investing, time matters a lot.
Before reading this book, I knew only about Mutual Funds (that’s the only thing that is being advertised nowadays), however, now I know that Index Funds are a better deal and give almost similar returns in comparison of Mutual Funds while keeping the expense ratios very low.
Most of the content in the book is US specific, so I would not be able to apply the techniques from this book as it is, however, the financial literacy that I gained from this book is still valuable.
Here are some of my favorite quotes from this book:
The 85 Percent Solution: Getting started is more important than becoming an expert.
Young is about developing the right habits.
Fear is no excuse to do nothing with your money. When others are scared, there are bargains to be found.
People love to argue minor points, partially because they feel it absolves them from actually having to do anything.
The single most important factor to getting rich is getting started, not being the smartest person in the room.
Because of inflation, you’re actually losing money every day your money is sitting in a bank account.
When individual investors talk about complicated concepts like this, it’s like two elementary school tennis players arguing about the string tension of their racquets. Sure, it might matter a little, but they’d be much better tennis players if they just went outside and hit some balls for a few hours each day.
Credit has a far greater impact on your finances than saving a few dollars a day on a cup of coffee.
Establishing good credit is the first step in building an infrastructure for getting rich.
If you have a credit card, keep it active using an automatic payment at least once every three months.
The best ways to improve your chances of getting fees waived is by keeping track of every time you call your financial institutions, including credit card companies, banks, and investment companies.
Focus on the big wins if you want bigger results.
The easiest way to manage your money is to take it one step at a time—and not worry about being perfect.
“Compounding,” Albert Einstein said, “is mankind’s greatest invention because it allows for the reliable, systematic accumulation of wealth.”
The key to using credit cards effectively is to pay off your credit card in full every month.
WWAID? (What would an Indian do?)
All our lives, we’ve been taught to defer to experts: teachers, doctors, and investment “professionals.” But ultimately, expertise is about results. You can have the fanciest degrees from the fanciest schools, but if you can’t perform what you were hired to do, your expertise is meaningless.
One of the key differences between rich people and everyone else is that rich people plan before they need to plan.
Thanks for reading :)