An extraordinary portfolio, even on an ordinary income, by following one commonsense investing strategy
Well, before you get excited, let me explain what the author is advertising: saving your money and putting it in an index fund. Is this a good strategy? There isnt anything wrong with saving money and putting it into index funds but there are a number of errors in implementing it. The author fails to understand the risks of tax consequences (which will reduce the expected millions), and fails to understand that there are cycles in investments, so why would you want to be invested in the US market, with an S&P 500 index, when other areas of the world, such as the Asia Pacific region, may have more potential over the long-term for growth? Why limit yourself to the US market that could very well under-perform for seventeen years, for example, as it has before after a boom period? The author lacks a filter on understanding what is and what isnt a good investment. Investment grade life insurance can offer a stable return, or linked through an index, where you get the upside in a good market but not the downside. This is the way to go if you want index exposure and you are eligible for tax free retirement income with investment grade insurance contracts. The bonus is that should something happen to you, you also have life insurance, so your family will have tax free income to provide for themselves. Thats going to be a lot better for your dependents than your IRA or 401k, especially if the death benefit is high. So while I dont see this book as being valuable you still may be curious so here are some notes:
Five steps to financial freedom (Im getting tired of them calling it that)
1. Max out all tax-deferred savings (I say, may or may not be the best choice, you can also get another mortgage or refinance into interest only and get the same or higher tax deduction benefit)
2. Pay yourself first
3. Invest automatically and benefit from dollar cost averaging
4. Use the armchair investment strategy (nothing more than buying an index fund)
5. Start today put the power of compounding interest to work for you