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The wealth-building thread

JeffS7444

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Got any good advice for building wealth from books or other sources, please share!

Me: After years of neglecting my retirement accounts ("no time, too busy") I found myself unemployed at the end of 2019, so I had no more excuses for not tidying things up. By sheer dumb luck, I put my money into an S&P 500 index fund at the end of April 2020, just in time to see my paper net worth soar farther than it would have gone had I continued at my old job and not tidied up my accounts. (sweet, but I'm not rushing out to buy a set of Kii speakers on the basis of unrealized gains).

Here's some of the money-related books that I've read to date:

Buffett: The Making of an American Capitalist
I must have read this in the 1990s when I had even less of a clue on how to invest than I do now. And it encouraged me to treat investments as a nice boring activity and not something to be constantly tracked and tweaked. But maybe I got a little bit too lax with oversight.

The Millionaire Next Door
It's been years since I've read it, the only part I recall off the top of my head was a factoid that the Ford F150 was apparently the self-made millionaire's vehicle of choice at the time the book was written. Maybe I should review to see what I've forgotten.

Your Money or Your Life
I encountered this at a time when I was in debt and hadn't really considered whether it was a problem. Quickly came to appreciate that I was not going to get rich fast while paying a bank 18% interest for my latest toy.

I Will Teach You to be Rich
Cheeky writing style and gimmicky title, but so far as I can see, the actual advice is anything but gimmicky - lots of examples of how to take advantage of services which I was already vaguely aware of, but had never put into action. But I wonder what to make of the suggestion to invest in target-date funds - is it overly conservative?

Rich Dad Poor Dad (series of books)
Since it was checked out at the library, I didn't start with the original "Rich Dad Poor Dad" but rather, "Rich Dad's Who Took My Money?". For a man who by his own admission lacks writing skill, Robert Kiyosaki certainly has managed to crank out a lot of books! WTMM struck me being rough around the edges, full of tales used to illustrate the author's points, and here and there, a random zinger, such as including IPOs as a possible way to make money. I came away thinking that there might be some valuable information contained in the book, but not all bits are to be taken as good ideas, much less recommendations.

And yet, for me there's a core appeal to Kiyosaki's writing: My own "Poor Dad" would have been lost without his stable federal job, and I feel like I was brought up with some unhelpful beliefs which I could stand to unlearn (pretty much the same "Study hard, get a good job, work hard" ethos that the author got). I like the notion of building wealth by letting other people, and other people's money, work for me but don't have any particular ideas as to what's right for me.
 

Pdxwayne

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I have no new advise. Warren Buffet books, millionaire next door, rich dad poor dad are some that I read and would recommend.

I also made lots of investments during the low last year. But that was no just pure luck. I was just following Buffet's motto.
 
OP
JeffS7444

JeffS7444

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I was just following Buffet's motto.
Which motto? He's a very quotable man. The one that I recall is "If you don't knew jewelry, know a good jeweler".
 

q3cpma

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No point in working too hard here, the pinkos and/or politicians will take it away via a dazzling amount of taxes, direct or indirect. Anyway, am I the only one completely disgusted with the concept of "finance" aka playing around with money? Even if this can be a great boon, as your post explain, I just don't want to have anything to do with it; nor the worry I'm sure it'd bring me.
 

charleski

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I must admit, having come across too many 'I can teach you how to get rich trading forex options'* ads on Youtube this weekend, my first though on seeing this thread was, 'OMG, not here as well!'
:cool:


*How to get rich trading [insert financial instrument]: get others to pay you to teach them how to get rich trading it.
 

Tom C

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A Random Walk Down Wallstreet
This is a classic, read by everyone majoring in finance when I was in business school. I got my MBA from Cal Berkeley.
It was an interesting phenomenon when some of the top investment banks went to recruit at the math and physics grad schools . There is a saying that money attracts brains, and there are a whole lot of Wall Street people that are frighteningly brilliant. Trying to outdo them is folly.
One thing they taught me is that trying to pick individual stocks has a high failure rate. Even professional fund managers have difficulty succeeding over time, and rarely do. In fact, it is quite rare to beat the S&P 500 over a long period. Index funds are readily available at no load and low administrative fees, in part because it takes zero skill to run them. Just maintain a weighted average of the top 500 US stocks, and adjust periodically for shifts in value.
One fund manager that did manage to consistently beat the S&P for about 10 years was Peter Lynch, former manager of the Magellan fund. Magellan was so successful it grew quite large, and eventually couldn’t beat the S&P because it was the S&P. With so much capital under management it became impossible to find unique areas to invest. After his retirement from Magellan, Mr. Lynch wrote a book titled “One Up on Wall Street.” I won’t give away the plot, but he says you shouldn’t try to beat the industry professionals, and you shouldn’t have to. You can use the knowledge you have from everyday life to help guide your investments. Along with sound research, of course.
 

Chromatischism

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This I can relate to on some level, but I actually think strictly following this leaves a lot of money on the table in opportunity cost. I understand not thinking you have the time or interest to research stocks and assets but a few good ones will easily outperform an index of 500 or 2000 companies.
 

Ralph_Cramden

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This I can relate to on some level, but I actually think strictly following this leaves a lot of money on the table in opportunity cost. I understand not thinking you have the time or interest to research stocks and assets but a few good ones will easily outperform an index of 500 or 2000 companies.

In the short term, perhaps. Over many years, not a chance.
 

digitalfrost

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No point in working too hard here, the pinkos and/or politicians will take it away via a dazzling amount of taxes, direct or indirect. Anyway, am I the only one completely disgusted with the concept of "finance" aka playing around with money? Even if this can be a great boon, as your post explain, I just don't want to have anything to do with it; nor the worry I'm sure it'd bring me.
The problem is, if you don't you're essentially losing money. The low interest rates and the flooding of the market with money which increases asset prices is already in progress, and it means that any $ you currently own buys you less than it did in the past.

I can understand not wanting to spend too much time on it, but you can automate this away pretty easily. Just create a savings plan that invests in something like the Vanguard FTSE All-World and don't touch it and you'll be better off than 80% of people.

One of books OP mentioned, I will teach you to be rich spends a lot of time on automating things away. This really helped me. It's not even about investing in stocks, but just about concepts like pay yourself first. I can't actually use most of the finanical intruments mentioned in the book since I'm not in the US and I would still recommend it to people.
 

vco1

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I'm not an expert at all, but I do think this is not the right moment to invest in stocks or funds. The market is way too high imho.

Or am I wrong?
 

TulseLuper

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this leaves a lot of money on the table in opportunity cost.

I try to avoid this line of thinking, personally. I do not need to make more money than the next guy. I just want see growth that gets us to our life goals (which we have to constantly evaluate), and we're young and earning so that doesn't need to happen overnight. Inflation is the competition, not my neighbor.

No denying that for many it's a fun game and the goal is to win.
 
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