I Read 40 Books On Money - Here's What Will Make You Rich
In the last few years, I've delved into nearly every book available on money and investing.
From the foundational classics like "Rich Dad Poor Dad" covering the basics, to psychology-focused reads like "Think and Grow Rich," and those delving into investing strategies such as "One Up on Wall Street."
In this article, I'll give the key insights I've gathered from all my reading.
Some points surprised me as they contradicted what I learned in my day job at a hedge fund and I want to know if you share the same perspectives!
Book #1
Let's kick things off with the fundamentals, and what better place to start than the timeless classic, "Rich Dad Poor Dad."
This book is a staple for a reason, delving into financial foundations often overlooked in traditional education.
The narrative revolves around the author's two father figures: his biological dad, advocating a secure job and conventional retirement, and his friend's dad, a high school dropout turned business mogul, championing independent thinking and investing in income-generating assets.
Assets & Liabilities
"Rich Dad Poor Dad" introduced me to the crucial concept of assets and liabilities.
Assets, it explains, are things putting money into your pocket—be it investments like stocks, real estate, side hustles, or businesses generating additional income.
In contrast, liabilities are money-draining entities losing value over time, and these are the financial pitfalls to sidestep during your formative years.
Is Your Home Your Primary Investment?
The book challenges the notion of considering your home as a primary investment, highlighting the risk of overspending and acquiring more house than necessary.
This approach could lead to significant monthly outlays that might be better utilized elsewhere.
"Rich Dad Poor Dad" serves as an excellent starting point for your personal finance journey.
It breaks down core concepts in an easily digestible manner, emphasizing the importance of assigning a purpose to each dollar—a mindset that clarifies the trade-off between present expenses and future income.
After all, every dollar spent today is one less working for you in the future.
Just to let you know, I have a separate video dedicated to this book, so if you are interested, you can watch it here!
Book #2
Next up, we delve into the follow-up book, "The Cashflow Quadrant." The conventional nine-to-five job is just one of many avenues to financial prosperity—this book opens up a plethora of possibilities beyond the typical job security mindset.
It challenges the notion that a stable job is the sole legitimate path to financial security, encouraging readers to break free from the desk-bound life and explore diverse avenues for financial independence.
"The Cashflow Quadrant" introduces a powerful concept: the four ways to earn money, represented by the cashflow quadrant.
It begins with being an employee, encompassing traditional nine-to-five jobs.
Then, there's the realm of self-employment or small business ownership, illustrated by roles like a dentist or freelancer.
Progressing further, we encounter big business ownership and, finally, the path of an investor.
The book not only paints a vivid picture of these earning avenues but also provides insights into leveraging this concept for achieving financial freedom.
It challenges the belief that solely relying on a job may hinder rather than aid your journey to financial prosperity.
Book #3
It's a valuable read for sparking ideas, but for practical steps and actionable insights, I suggest turning to another book, specifically "The Four Hour Work Week" by Tim Ferriss.
Upon initially encountering the title or delving into its content, I held some skepticism about the feasibility of a four-hour workweek.
However, as I immersed myself in the book, it became evident that the concept wasn't centered around working less but rather working smarter.
Work Hard → Work Smart
The shift from working harder to working smarter involves a focus on leveraging systems.
This approach encourages the optimization of efforts, allowing for a balance between diligence and efficiency.
Tim Ferriss, in "The Four Hour Work Week," introduces the idea that one can lead a retired millionaire lifestyle by establishing and automating their business, enabling them to collect income while living life to the fullest.
This notion, initially seeming far-fetched and beyond reach, is portrayed as remarkably achievable.
The Pareto Principle
An essential concept here is the Pareto Principle, or the 80/20 rule, indicating that 80% of output arises from 20% of input.
For example, 80% of a business’ revenue comes from 20% of the clients.
This principle doesn’t just work in the world of business, but also in various aspects of life.
Understanding the 80/20 rule allows you to work smarter, not harder, by focusing on the critical few aspects that yield the most significant results.
So, these two books complement each other seamlessly: "Cash Flow Quadrant" broadens your perspective on earning money outside of the traditional 9 to 5 job structure, while "The Four Hour Work Week" provides practical tools to make that into your reality.
Book #4
Next on the list is "The Millionaire Fastlane."
The author makes a thought-provoking point that there's no such thing as getting rich easily, but there is a possibility of getting rich quickly.
This perspective is intriguing, as it challenges common beliefs. The book outlines three financial paths.
i) The Sidewalk
The first is the "sidewalk," where you spend more than you earn, which traps you in a paycheck-to-paycheck cycle.
ii) The Slow Lane
The second is the "slow lane," a safer route involving what your parents tell you since you were young.
Which is getting good grades, a stable job, saving a portion of your paycheck, investing that money in your 401k, and enjoying retirement typically around 65.
While this works, the issue is it’s a slow game, which means you are trading time for money.
iii) The Fast Lane
Then, we have the third path, the fast lane, which involves utilizing your time to generate passive income.
Essentially, it means investing your time in tasks that create passive income, like developing a product or a system capable of earning income long after your initial time investment, which will broaden your income potential.
What impresses me about this book is that MJ, the author, while saying that getting rich quick exists, which sounds like a scam, but he also mentions that it’s not possible without substantial hustle, hard work, and discipline.
From the outside, it might seem like an overnight success, but it’s actually the accumulation of years of unwavering commitment, experience, and knowledge.
I actually have a separate video on this book as well, so you can check it out here if you are interested!
Book #5
Next up is "Think and Grow Rich," a book that often sparks differing opinions—people either love it or hate it with little middle ground.
Some find it lacking in substance, expecting a clear, actionable roadmap to wealth and feeling disappointed.
On the flip side, others credit it with transforming their mindset and financial lives, acting as a light bulb moment that unlocks limiting beliefs.
My take on it?
In terms of success, I firmly believe that mindset is pivotal.
A scarcity mindset, where one believes there's never enough and money is hard to come by, tends to manifest that reality.
Conversely, an abundance mindset, coupled with the belief in one's capacity for wealth, aligns actions with those beliefs, paving the way for success.
However, there's a significant caveat—mindset alone is insufficient.
Even with the most positive mindset, progress requires consistent, focused action.
It's akin to possessing the best tools but never using them to build anything.
Therefore, both the right mindset and sustained action are essential.
A Common Problem For Beginners
The book also addresses a common stumbling block for beginners—waiting.
Many individuals starting out find themselves waiting for the perfect moment, waiting for the ideal business model, or waiting for everything to be just right before taking action.
However, the book emphasizes the obvious truth that there's never a perfect time.
There never was and there never will be.
The initial phases of any journey, especially the quest for wealth, are bound to be messy.
Successfully navigating through this mess is key to achieving success.
If you're open to exploring your beliefs and delving into your mindset for improvement, especially regarding abundance, this book is worth considering.
However, if you prefer a more step-by-step guide to wealth-building without a philosophical approach, you might want to explore other book recommendations mentioned later in this article.
Book #6
Next in line is another classic, "The Psychology of Money."
This book underscores that money is not only about mathematical calculations but equally about psychology.
It delves into how our minds perceive and engage with money, our emotional connections to it, and how past experiences shape our financial behavior.
Often, these psychological aspects overshadow the raw financial knowledge we possess.
The Role Of Luck
The book's most intriguing aspect is its exploration of how frequently we misattribute the role of chance or luck in our financial lives.
The author notes that many of us derive lessons about money from studying exceptional success stories like those of Bill Gates, thinking we can replicate them.
However, the more extraordinary the story, the more likely luck played a significant role, making it harder to extract applicable lessons.
To counter this, the author recommends focusing on patterns rather than individuals.
If one person achieved success through Route A, but ten others did so through Route B, the chances are that Route B is more reliable for replication, as luck likely played a role for the person on Route A.
While there are fundamental patterns in managing money applicable to everyone, there are nuances often overlooked by many money books.
Now, having covered the basics of money management, let's delve into the wealth-building aspect.
Where To Make Money?
Where should we invest our money for it to multiply?
Alex Hormozi introduces the concept of "ignorance debt" in gathering knowledge, emphasizing that the gap between our current level and earning 100 million is the information we haven't yet learned.
This concept is crucial in investing, as beginners might overestimate their understanding of the topic.
Premature confidence can lead to misguided decisions without a solid foundation of understanding.
To tackle this "ignorance debt" and initiate your investing journey, "The Intelligent Investor" is an excellent starting point.
Book #7
Warren Buffett, at the age of 19, read "The Intelligent Investor" and continues to label it as the best book on investing ever written.
The principles outlined in this book are timeless, emphasizing that successful long-term investing doesn't necessitate specialized knowledge, exceptional intelligence, or profound insights.
Instead, it hinges on two key elements: a rational framework for decision-making and the ability to prevent emotions from overriding this rational framework.
The book delves into topics such as market behavior, fundamental financial principles, and strategies for maintaining control over one's psychology in the realm of investing.
Book #8
Next in line is "The Little Book of Common Sense Investing" by John Bogle, the founder of Vanguard and the creator of index funds.
Bogle advocates for a straightforward strategy for novice investors: consistently invest in index funds.
He explains why index funds tend to outperform other primary alternatives and discusses the optimal asset allocation between stocks and bonds based on age.
While acknowledging its significance, it's worth noting that some find this book a bit outdated, and Bogle's approach to asset allocation is considered conservative by some.
Book #9 & #10
A great continuation from the previous book is "One Up on Wall Street" and "The Dhandho Investor."
Both adhere to a similar principle regarding the best investments:
which is the best investments are often found right in front of us, aligning with what we already understand and interact with daily.
In other words, regular people like me and you, we buy from brands everyday, like Starbucks, Costco, Amazon, Apple.
So we already have a deeper understanding of certain products that we use that are not as mainstream, which will give us an edge over Wall Street Pros.
While I agree with this to some degree, it's essential to note that it's not as straightforward as just being a customer of a certain product and investing in that company's stocks; thorough research is still required before making investment decisions.
A common theme running through all these books and genuine financial advice is that there are no shortcuts to success or wealth.
It demands discipline, persistence, and the ability to manage emotions, especially when it comes to financial matters or other aspects of life.
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Alright, cheers, and see you next week!
- Ivan