This week’s book learning is part 5 of a 5 part series on Personal Finance and Investing inspired by 3 books – The Investors Manifesto by William J Bernstein, I Will Teach You to Be Rich by Ramit Sethi, and The Millionaire Teacher by Andrew Hallam. (Part 1, 2, 3, 4)
For yourself
– Live like a millionaire. The average millionaire always buys a 2nd hand car as depreciation is maximum in year 1. Millionaires buy Japanese models as they have the best resale value.
They don’t spend on watches or fancy homes. They live in suburbs as it’s cheaper to own homes. If you’re ever in need of inspiration, read up on Warren Buffet
– Invest in plain vanilla index funds. They are a consistent 8/10. They will NEVER be a 10/10 but will never be a 1/10 either.
Index funds can be bought for cheap off Vanguard (if you live in the US, Canada, UK, or Australia). For Singapore residents, DBS Vickers provides index funds – they are slightly more expensive than Vanguard but work well as long as you invest more than $3,000 at a time
– Focus on the important stuff. Ignore minutiae like tax optimization until you earn in the millions
For your heirs
– The best gift to your heirs is not cold hard cash. Rather its the ability to save, spend wisely, and invest prudently
– Teach your kid to equate money to work from when they are young i.e. if they want $10 worth of stuff, are they willing to mop the floor at the supermarket for 2 hours?
Giving back and summing up
– Also, remember to give back a small portion of what you earn. Ramit Sethi did this by starting out a scholarship for young entrepreneurs. You can, too..
– Bill Bernstein sums it all up with sage advice – Live simply and save as much as you can for as long as you can.
Sketch by EB
I hope you found the series useful!
A Learning a Day 