Congratulations – by virtue of the fact that you are reading this, you are well on your way to reaching Financial Independence. Step one to reaching FI starts with deep introspection; an honest appraisal of your own knowledge and ability. This should result in a humble and burning desire to learn more, and educate yourself.
Self education is the way to reach Financial Independence. You will not find it taught in schools, nor universities, nor will you see it on TV shows or featured in the Media – lest it be published as some form of public spectacle or jest for the masses to ‘tut tut’ about and agree that its ‘impossible’.
Your burning desire to learn and improve will help you create a growth mindset. You will adopt an abundance mentality and find ways to succeed. Literature will nourish your soul as you pore over countless lessons and are mentored and guided by page after page. You will become smarter and wealthier with every paragraph. Did you know that the majority of all millionaires spend over an hour per day reading? You do now!
I spent years struggling through the schooling system – a hyperactive child with a gifted mind proved too much for many institutions and teachers. I attended over 17 different schools, and a further 12 institutions and universities as I bounced from one suspension and expulsion to the next. Along my journey though, I met some amazing teachers and mentors which I truly believe changed my life for the better.
I was never taught any money lessons during my formal education – apart from perhaps that which I made the connection with through my advanced engineering mathematics lectures in University. I have studied long and hard during my life; and I learned that self education is the key to success – no one is going to do your job for you!
As a result of rapidly adopting the principles of self education, in high school I graduated in the topmost academic score tier of the nation, at University I graduated with first class honors in aerospace engineering, as a Pilot I was able to earn an Airline Transports Pilot Licence, and continued part time study resulted in a Masters degree in Space engineering. I will continue learning until the day I die, and I have a burning desire to continue post graduate research with a Ph.D in Space flight research in years to come.
I was well on my way to becoming Robert Kiyosakis ‘Poor Dad’ until I discovered FI/RE and how I needed to pay attention to securing my finances and acquiring assets over liabilities. Now I will be a ‘Rich Dad. Take it from me – Self education is the Key. Read more and read often. If this is a skill that you are lacking, stop making excuses and use your positive, abundance mentality and burning desire to improve your reading ability.
Published authors have typically been through rigorous editing and publishing process. In the academic world, the scientific method involves hypothesis, research, gathering evidence, trials and experiments and painstakingly detailed examinations; often only to then repeat the process over countless iterations. Works are then thoroughly peer reviewed and ripped apart, and then sent back for further countless revisions prior to being accepted and published. Outside academia, the publishing process can be just as brutal, and a published author is accountable for their works to be fully judged and reviewed in the public eye
There is a fantastic amount of information freely available to you which has been written online, however you should always take what you hear online with a grain of salt; anyone can publish almost anything online these days! I follow a number of fantastic blogs like Mr Money Mustache and the Aussie Firebug, as well as follow a number of great bloggers and personal finance Gurus on Facebook and Instagram. However, the most powerful lessons I have learned have always come through self directed learning through reading and books.
Although I prefer fact (non-fiction), there are a huge number of fictional works and parables (stories) which can be hugely beneficial to you. For example ‘The Richest Man in Babylon’ written by George Samuel Clason in 1926 is a collection of parables set in ancient Babylon some 8,000 years ago, but its lessons are just as relevant to modern finances as they are to the ancient Babylonians.
So, less social media (and regular media for that matter!) and more books. Check out your local library to see if you can loan out a free copy of these, if not then jump online to see if you can get a free PDF or downloadable version*. If you still cant find it – ask your friends or family if anyone has a copy you could borrow. Only as a last resort should you resort to surrendering your dollars and buying a copy, and always look for a used or second hand copy first!
*NB I am not advocating pirating or stealing as authors generally work pretty hard and get paid a pittance for doing so, but some offer free downloadable content. Some eBook services like audible offer a few free books as a sign up bonus too
The Captains reading list
In no particular order are the highlights from my library, forming the Captains reading list. I will work through and provide a quick review summary of each these over time to help you select which order you might select them. Once I am through the list I will begin writing a detailed post for each individual book. Happy reading!
The Intelligent Investor | Benjamin Graham, Warren Buffet
Those who do not remember the past are condemned to repeat it.Benjamin Graham
Graham explains the principles behind Value investing; the long term investing strategy which ignores market volatility and sentiment by focusing on investing in companies with good fundamentals and intrinsic value to generate steady profits. Learn the difference between an enterprising investor and a defensive investor, as well as the key concepts behind selecting long term profitable investments.
How to win friends and influence people | Dale Carnegie
It isn’t what you have, or who you are, or where you are, or what you are doing that makes you happy or unhappy. It is what you think about it.Dale Carnegie
This book has shaped behavioral psychology since its release in 1936. This self help classic focuses on your relationships and interactions with other people, demonstrating through examples of mindfulness how you can become more likeable, win people over and and lead others without being intrusive.
For example a lesson in emotional intelligence given is to be genuinely interested in other people during your interactions. Listen to their needs and desires and shape the conversation around these to establish a motivation. Elicit agreement (“yes”) on common grounds and gradually work towards your goal whilst using positive body language like smiling and touch, and using the persons name frequently.
You can negotiate everything | Herb Cohen
Most things in the world can be negotiated, so you should learn to do it well!Herb Cohen
Written in 1980, Cohen shows that life is a constant stream of negotiations which occur in almost every avenue, including many which people don’t understand or are unwilling to recognize. Cohen explains why it’s important to have the skills and understanding to deal with these negotiations, and how this can give you a better life.
Cohen explores common styles of negotiations and then outlines key factors affecting negotiation success – such as whether you are talking to the right person, and properly understanding what the other party wants. Although negotiation success is highly influenced by motivation, power, time and the information that each side has at their disposal, ultimately it is achieving mutual benefit that is the key to successful negotiations.
Warren buffet’s letters |Warren Buffet
Warren Buffet, CEO of Berkshire Hathaway provides a number of fantastic and freely available letters to his shareholders as well as general advice, observations and information which can be found on his no frills website for Berkshire Hathaway.
Motivated money | Peter Thornhill
Investing should be boring. [Whilst people stress over volatility] I will be sitting, bored witless, choking on my dividend cheques.Peter Thornhill
Peter Thornhill’s experience and insights into wealth creation through investment and his entertaining delivery make for a good read. Motivated Money led to Thornhill becoming a sought after presenter and recognized financial commentator. Thornhill himself lives on a passive dividend income of over $500,000 due to consistent investing in strong dividend yielding stocks.
Thornhill challenges you to check your financial prejudices, such as the concept of certain asset classes being ‘riskier’ or ‘safer’ than others. He then demonstrates that over longer time frames, commonly accepted financial prejudices are just plain wrong.
Thornhill explains how dividends can be used for income, and why over the long term this is preferable to bonds or fixed interest securities. He goes on to outline that realistically you should ignore the capital value or price of the stocks, or fears of stock market crashes. Realistically you should be worrying about things that matter like your family and having fun, whilst your increasing stream of dividends just keeps rolling in..
How not to die | Gene Stone, Michael Greger
The primary reasons that diseases tend to run in families may be that diets tend to run in families.Michael Greger
How not to die explains how you can extend your life, and your quality of life, based on scientific evidence which recommends switching to a predominantly whole food plant based diet
Let food be thy medicine. Research has shown that your diet has a lot to do with your health, quality of life and how long you live. Whole food plant based diets are not a fad, and changing your diet to avoid processed foods and animal products has an overwhelmingly positive impact in protecting you from diseases of affluence such as Cancer, Diabetes, Obesity and heart disease.
Michael Greger explores the science behind how diet plays a role in these chronic diseases from the lens of his background as a medical doctor. He discusses how the medical industry often ignores poor diet as a causal factor for disease, and how the simple act of eating fruits and vegetables can protect you from them.
The Barefoot Investor | Scott Pape
You can continue living in the past, beating yourself up about the money mistakes you made when you were younger, telling yourself you’ve left it too late… or you can rise up and make yourself proud.Scott Pape
Scott Pape is one of Australia’s most trusted finance commentators, and is frequently featured in TV and print media. Pape has even advised government as well as world sporting teams on financial issues, and now is using his knowledge to help everyday people through his nine step financial guide.
His top three tips? Simplify your money management by using different bank accounts and ‘money buckets’, Destroy your debt and then automate your retirement saving by planning automated purchases of index funds.
The Barefoot Investor is chock full of practical money tips that you can implement straight away. From organizing your bank accounts, to drastically slashing your bills (he provides scripts for you to recite to your mortgage bank for example) to starting investing, Scott gives you straightforward advice in a very easy to digest format of his ‘Nine barefoot steps’
Barefoot step 1. Schedule a monthly ‘Barefoot date night’ to get dressed up and review your finances
Barefoot step 2. Set up your ‘buckets’ (automate how your income hits your bank account, pays bills and splits saving for several goals ‘put your money on autopilot’)
Barefoot step 3. Domino your debts – pay off your debts, smallest to largest, and escape the cult of credit!
Barefoot step 4. Buy your home (Principle Place of Residence)
Barefoot step 5. Increase your retirement savings to 15% of your income
Barefoot step 6. Boost your Mojo (emergency fund) to three months living cost
Barefoot step 7. Get the banker off your back – Knock down your mortgage by making extra repayments
Barefoot step 8. Nail your retirement number: Financially plan for retirement using your investments and social security
Barefoot step 9. Leave a legacy – how do you want to make a difference in the world?
The Barefoot Investor for families | Scott Pape
By the time your child leaves home they should have promised you to never, ever get a credit card.Scott Pape
In the follow up sequel to his original best selling hit ‘The Barefoot Investor’, Pape turns his attention to the younger generation and helping parents to teach their children how to be financially literate.
Through his ‘Barefoot ten’ he establishes the ten commandments for teaching your child financial literacy; these start with opening up a simple zero-fee high interest savings account, volunteering in their local community, getting a part time job (from age 15 onward), and then progress right through to saving for a home deposit and setting up their ultra-low-cost, high growth index fund based retirement accounts.
Pape extols the virtue of giving and volunteering, and encourages parents to set up three jars for each of their children; A Give, Smile and Splurge jar. Parents can then provide each child with a physical allowance or pocket money for completing age appropriate jobs in the household. The physical payment is the key, as it allows children to reinforce the saving concept by placing their allowance in their ‘three jars’ in whichever ratio they choose.
Barefoot for families is packed full of practical parenting advice on the topic of teaching your kids smart money habits. I would recommend it not only for parents or those expecting, but for everyone as its simplicity and take on the psychology of finance is a great reflection on our modern society.
Rich Dad Poor Dad | Robert Kiyosaki
The main reason that over 90 percent of the American public struggles financially is because they play to not lose. They don’t play to win.Robert Kiyosaki
Rich Dad Poor Dad helps you develop the correct mindset and burning desire for success in building wealth and financial freedom through the story of a young boy who grows up with two Dads; A rich Dad, and a poor Dad. While he loved both of his Dads and they both had a huge impact on his life, both were incredibly different in handling finances.
One of Kiyosaki’s Dads is a highly successful academic, who drives an expensive car with a large beautiful house in an expensive suburb. He is conservative and doesn’t take risks with his finances. He is also the Poor Dad.
Kiyosaki’s Rich Dad instead focuses on building wealth through businesses (where he doesn’t trade his time for money), living below his means and acquiring assets that produce income, instead of liabilities like flashy cars and houses. Kiyosakis Rich Dad is actually the father of one of his childhood friends, who takes him under his guidance and mentors him as he grows up.
Although a fairly controversial and often heavily criticized book, Rich Dad Poor Dad is a modern classic of personal finance and is a best seller, having sold over 30 million copies. Its most important lesson is to start getting rid of your liabilities and start buying productive assets today!
The Selfish Gene | Richard Dawkins
An individual organism is a throw away survival machine for the self replicating coded genetic information which it contains. Genes are immortal because they can be replicated with almost total fidelity generation after generation – there are genes now which are identical to what they were hundreds of millions of years ago in some cases.Richard Dawkins
From the author of the best selling ‘The God delusion’, Dawkins explains the theory behind genetics and the potential for the coded information stored within genes to become immortal through successful survival, adaptation and replication.
Dawkins explains that successful genes are good at surviving; good at building bodies and controlling the processes of embryology to make bodies that has what it takes to preserve those genes and pass them on; to build survival machines.
He explains the inherent drive we all posses for survival and replication as a result of the ‘spark of life’ given to us through our genetics. He discusses ‘gene selection theory’ or ‘selfish gene theory’ and how through adaptive evolution only the toughest and most adaptable genes can survive, building ever slightly changing organisms in the process.
There are interesting ramifications in social theory from this discussion, including the process of dating and relationships. I found this fascinating as it goes some way to helping you understand why you behave the way you do. Both in terms of regarding your survival – how you structure your security through career and finances, and how this is traded-off against reproduction through your relationships and sexual preferences.
The Snowball | Alice Schroeder
Time is the friend of the wonderful business, the enemy of the mediocre.Warren Buffett
The Snowball is authorised biography of Warren Buffett, the ‘Oracle of Omaha’ and worlds best investor. Schroeder details his humble start in life and his burning desire for investing knowledge even as a child, all the way to his incredible successes with value investing and running Berkshire Hathaway.
Warren Buffett under the mentor ship of Benjamin Graham was able to beat the S&P 500 index in 40 out of 50 years, becoming one of the top third richest people in the world. Buffet provides sage advice: Start early (your already late, so get started now!), and be patient. Buffets attitude and mindset resonates well with the FI/RE crowd, who are able to heed his advice and put the needs of tomorrow over the wants of today.
The Snowball is a fantastic and detailed read, and you are sure to take several lessons out of it over the course of reading.
Think and grow rich | Napoleon Hill
The starting point of all achievement is desire. Keep this constantly in mind. Weak desire brings weak results, just as a small fire makes a small amount of heat.Napoleon Hill
Think and Grow Rich is a summary of over 20 years of research and observations of over 500 wealthy individuals. Hill describes how he observed these people to be successful, and provides 13 of their most common habits. With over 70 million copies sold, Hill is one of the best selling self help authors around.
Hill suggests the most important habits for success (and growing wealth) are a Strong and unshakeable self belief, an burning desire and tenacious determination. Hill explains that by surrounding yourself with a group of successful mentors, you can drastically cut the time it would normally take to become competent and successful yourself, ‘hacking’ the learning curve.
Raising boys in the 21st Century | Steve Biddulph
If you routinely work a 55 or 60-hour week, including commute times, you just won’t cut it as a dad. Your sons will have problems in life [without active role models], and it will be down to you. Your boys will become men. But what kind of men?Steve Biddulph
Unfortunately children don’t come with instruction manuals. Parenting can be incredibly rewarding but it can also be an exceptionally confusing and difficult time for parents.
Raising Boys in the 21st Century is one of the most popular parenting books ever written. Biddulph tackles the tricky issue of parenting from baby, toddler to teen, and things you can do to ensure your son grows up to be a strong, kind and successful man. Biddulph recognises the spectrum of gender, and identifies statistical risk factors associated with each.
Biddulph is one of Australia’s best known psychologists, and has worked with schools in over 17 different countries. He focuses on a hands on engagement with your son to really get to know them; “If we understand them, we can help them”. He presents hundreds of practical parenting tips, backed by his concepts of the ‘physical fours’ and ’emotional eights’.
Key issues covered include: Gender, Brain and Hormonal development (focusing on the effect of testosterone on boys), Sexuality development through puberty including topics of pornography, gay and transgender sexuality, Boys and ‘bad’ behaviour, reading and communication and societal expectations.
Raising girls in the 21st Century | Steve Biddulph
The world today does not seem to care about girls as it should, and see’s them just as a way to make moneySteve Biddulph
Biddulph explains in ‘Raising girls in the 21st Century’ that corporations have made millions from the ‘pinkification’ of girlhood. The challenging demands of modern society and the pervasiveness of the internet and social media has exaggerated anxiety, narcissism and led to increased childhood exposure to pornography and other detrimental factors to girls development.
Biddulph challenges societal gender norms with a gentle undertone of antisexism, suggesting that the unconscious gender biases with which we treat our children can lead to much of the complications encountered with raising girls. “I am sure that no parent sets out to disadvantage their girls around a useful number of skills, yet we unconsciously start making the boys practical and the girls emotionally focused. So here is a suggestion – perhaps we ought to reverse this!”
Biddulph classifies girlhood into five stages: Security, exploration, learning to get along with others, finding one’s passion and then preparing for the freedom and responsibilities of adulthood. He provides parents with useful tips and warnings for each stage along with practical advice to help understand your daughters development.
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy |Thomas J. Stanley
Whatever your income, always live below your meansThomas J. Stanley
The Millionaire Next Door explains the incredibly simple financial habits that the affluent have which leads to an accumulation of wealth and reaching of financial independence. Stanley shows how with some basic planning, living below your means and avoiding being stupid with your money can lead to becoming a Millionaire.
Stanley outlines three rules to become a Millionaire:
1. Save [and invest] responsibly from the moment you first earn an income, 2. Ensure you stay above the ‘financial curve’ (Age multiplied by gross income divided by 10), and
3. Don’t fall into the trap of ‘economic outpatient care’ (that is to say, don’t expect any handouts such as from the bank of mum and dad)
The Millionaire Next Door is full of practical tips about modern frugality, mindset and how and where millionaires invest there money. He highlights the trap of inheritances and handouts, and also highlights what most Millionaires excessively spend their money on (its not what you might think!)
Total money makeover | Dave Ramsey
We buy things we don’t need with money we don’t have to impress people we don’t likeDave Ramsey
Dave Ramseys Total Money Makeover teaches you through seven steps how to build a strong financial future. Ramsey is the most popular personal finance book of all time, with millions of copies sold globally. Dave Ramsey is on a mission for the world to stop accepting debt as normal!
Ramsey presents the challenge of creating wealth through seven ‘baby steps’, which are;
Baby step 1. Creating an an emergency or ‘breathing space’ fund
Baby step 2. Incrementally paying of all your debts (snowballing from smallest to largest)
Baby step 3. Boosting your emergency fund to 3-6 months living expenses
Baby step 4. Begin investing 15% of your income for retirement [INDEX FUNDS!]
Baby step 5. Save for your children college expense
Baby step 6. Pay off your home
Baby step 7. Build wealth and give
The Total Money Makeover has common grounds with many personal finance books, such as Scott Pape’s Barefoot Investor. Nevertheless, it is still a good read and presents many unique aspects and practical tips which you can take away and implement. Although I prefer not to discuss the topic of religion, Ramsey often combines biblical references and preaching into his book which can be confronting for some.
Predictably irrational | Dan Ariely
The danger of expecting nothing is that in the end, it might be all we’ll get.Dan Ariely
Dan Ariely is a professor of psychology and behavioural economics at Duke university, and the founder for the research institution ‘ The Centre for Advanced Hindsight’. Ariely has a sharp wit and keen sense of humor which makes him a great author and powerful speaker. Ariely was nominated one of the top 50 most influential living psychologists in the world, and his TED talks have had over 15 million views.
Predictably irrational is a New York Times best seller, and explores the hidden drivers behind how humans act and make decisions, which turns out to be far less logical than you might think. Once aware of these behavioural traits, you can begin to master them in order to conquer your finances, business and social interactions to live healthier and happier lives.
Ariely presents several lessons to the reader, including;
1. People are hard wired to compare things, but often become paralysed by choice (analysis paralysis). To succeed, give others easy comparisons to pick you, or choices which benefit you.
2. Nothing is really free, but free is a powerful emotional trigger. People are hardwired to try and avoid loss, so we value free items disproportionately highly, often at the detriment of true gain or success.
3. People always overvalue what they own
The 7 habits of highly effective people | Stephen Covey
The main thing is to keep the main thing the main thingStephen Covey
Covey provides the reader with 7 Habits of Highly Effective people to improve their personal and professional effectiveness. By understanding how the world works and shifting your mindset to take advantage of this well, you can create great success. Published in 1990, Covey has sold over 25 million copies of the book, which is now referred to as the bible of modern management and leadership.
Covey’s 7 Habits are;
Success Habit 1. Be proactive: Take charge and assume responsibility.
Success Habit 2. Begin with the end in mind: Have a vision for the future and set goals accordingly to make it become reality. If needed, do the funeral test – simply ask yourself what would I want people to say about me at my funeral, what sort of a person do I want to be remembered as, and what do I want to be remembered for?
Success Habit 3. Put first thing first: Learn to prioritise your actions and focus on what is important right now – don’t get distracted by unimportant tasks. This means learning how to say no
Success Habit 4. Think Win-Win: A winner doesn’t necessitate a loser; in negotiations both parties can walk away with their fair share, and build strong relationships in the process.
Success Habit 5. Seek first to understand, then be understood: Don’t jump straight into a solution to a problem; first take the time to really understand and know a problem (or persons problem) before making recommendations or taking actions.
Success Habit 6. Synergise: The contributions of many together will far exceed the sum total of any of those individuals. Work collectively as a team and as a leader strive to inspire and motivate your team and look after its well being.
Success Habit 7. Sharpen the Saw: Strive for a sustainable life with plenty of time to recharge to ensure effectiveness in the long term “Give me 6 hours to cut down a tree and I will spend the first 4 sharpening the Axe” Abraham Lincoln.
The 80/20 Principle | Richard Koch
Strive for Excellence in a few things, rather than good performance in manyRichard Koch
The 80/20 principle, otherwise known as the Pareto Principle or the Principle of Factor Sparsity states that 80% of the effects come from 20% of the causes. This has been shown to be the case in many scientific and mathematical models in society from land ownership, wealth disparity and income tax distribution. It is also an axiom of business to say that 80% of sales come from 20% of clients, and in management that 80% of your problems come from 20% of your employees.
When applied to your personal or business finances, my take on the 80/20 principle was that you should focus on the basics first (for example starting investing in an ultra low cost index fund). The law of diminishing returns means the effort expended on the advanced details will yield much smaller results (for example trying to pick different types of index fund). The rule of thumb therefore is to focus on the 20% of causes to improve 80% of the results, and not on the 80% of causes (input) for the 20% of results. This is also thought of as getting the ‘80% solution on time’ rather than the ‘100% solution that never comes’.
Koch explains that when Steve Jobs returned to Apple in ’97, he cut the companies product line from 300 down to under 10. This allowed the company to focus on the minority (of products) which was producing the majority of profits for the company, and allowed time and focus to improve those.
A parallel can be drawn to social circles and friendships; do you find that you have the majority of your fun with only 20% of your friends? If you can identify this 20%, you should most of your effort into these relationships. It is much better to have a small group of really good friends than a big bunch of distant friends.
The Pareto principle or 80/20 rule can be applied to any area of your life; you just need to identify the 20% that produces the greatest outcome, and then you can spend more time doing that. It also helps you cut back on the 80% of the things which waste your time but provide only 20% of the results. It encourages you to think efficiently and what really matters.
The ADHD Advantage
Those with ADHD are Life’s entrpreneurs, CEOs, leaders, explorers, champion athletes and out-of-the-box-thinkersDale Archer
Dr Dale Archer is a famous psychiatrist and New York Times bestselling author. Dr Archer hosts his own TV and radio show, as well as blogs and writes extensively on the topic of ADHD, the Attention Deficit Hyperactivity Disorder, or sometimes called ADD (attention deficiency disorder). He also happens to suffer from the condition
Unfortunately, ADHD has one of the highest rates of misdiagnosis by health professionals as it is often seen as the ‘bad behaviour’ disability. Furthermore, it is also often mismanaged through over prescription of medication which can have serious health and mental implications.
By changing the way we view ADHD, people with it should learn to embrace it as means of success rather than a disability. Rather than a disease, ADHD is actually an advantage which helps you to thrive and succeed – just as Billionaire Richard Branson has done with the Virgin company (including a space program!)
ADHD makes you great at fast paced activities and rapid decision making, especially when it requires attention to many factors. This means often kids with ADHD are good at sports which forms a perfect challenge. People with ADHD often become leaders and explorers, where their boundary pushing and quick, lateral and creative thinking often allows them to come up with new innovating solutions
The ADHD Advantage is a great read if you might suffer from the condition, or have a family member or friend who is a little hyper, too. Lets work together and change the stigma, one page at a time.
The Life-Changing Magic of Tidying Up| Marie Kondo
The question of what you want to own is actually the question of how you want to live your lifeMarie Kondo
Marie Kondo teaches you to simplify your life and make your home more peaceful by cutting down, organising and storing your possessions in her step by step guide. The Life-Changing Magic of Tidying up is much more than just a book about cleaning away your clutter though, it focuses on changing your core mindset to an intentional life. This mindfulness perspective impacts the way you think and live, leading to a more deliberate and peaceful life. Just ask yourself – how at peace are you working at a cluttered desk, or how well can you sleep with clothes strewn all over the bed?
Kondo’s first step to tidying involves deciding whether to keep or discard the item, with the (now hilariously meme based phrase) “Does this item spark joy?”. If not, maybe its time to let it go. An example could be an item of clothing you haven’t worn for years, or one that is so ill fitting it makes you feel bad when you wear it. Kondo asks readers to hold the item and ask yourself;
1. What is the purpose of this object?
2. Has it fulfilled its purpose already? (such as letters or cards)
3. Why did I get this thing?
4. When did I get it?
5. How did it land in my house?
She explains that its better to move from easy to hard items when deciding what to keep, and moving through these categories in order to build up momentum and decision making skills
2. Books (and CDs, DVDs, Magazines etc)
3. Papers, Letters
5. Mementos or things with sentimental value
The second step to tidying involves deciding where to store the things you will keep. Don’t be tempted to rush into step two, as Kondo explains that everyone has limited space and eventually it will fill up with clutter if your not deliberate about what you keep. She warns that you should not even think of storing your items until you have finished the discarding process of step one. Designated placing and deliberate and thoughtful storage will help you to maximise your available space, such as folding of clothes in such a way as you can see them all.
Learning how to let go and what you should keep ends up being a pretty important life skill. Kondo explains the link between clutter and being afraid to let go because of past emotional bonds and ‘baggage’. It turns out though that when you clear away the clutter, you also clear your mind and soul. And that can be game changing in other aspects such as your relationships, career and finances.
The life changing magic of not giving a F*ck
The life changing magic of not giving a F*ck is all about prioritising. Joy over annoy. Choice over obligation.Sarah Knight
Sarah Knight is a freelance author and editor who graduated from Harvard University. She has created a funny, informative and practical book in The life changing magic of not giving a F*ck. Her tips on mental decluttering and mindset give you practical advice and things you can do right now to stop yourself caring about things that don’t really matter. The subtitle of “how to stop spending time you don’t have with people you don’t like doing things you don’t want to do” encapsulates the message of the book perfectly.
How much of your life do you spend people pleasing? What about stressing over things you cant control? Or overthinking? Maybe you need to embrace Knights ‘NotSorry method’ (a clear parody of Marie Kondo’s KonMari method) and learn to spend your time wisely and reject negative emotions. You should take everything and ask yourself ‘Does this annoy?’ – if it does, you should stop giving a F*ck about it!
Whilst it might be easier said than done, the power of saying ‘No!’ cant be understated, as puts you back in control of your life. Knight gives a few basic examples like declining invitations to baby showers (or equally as annoying events), unfriending annoying people on Facebook and wearing less makeup. She says if you learn to say ‘No!’ that “your spirit will be lighter, your calendar will be clearer, and your time and energy will be spent on only the things and people you enjoy”. This is exactly hat someone on the path to Financial Independence needs.
To help you say no, Knight recommends;
1. Be honest and polite when you say No (but not too honest or polite! Generalisations are fine, and help to avoid people taking it personally)
2. Start with small annoyances and progressively work toward bigger ones
3. Don’t take part in everything just because it seems ‘trendy’
4. Recognise the destructive marketing power of the internet and social media: limit your part in “social Madness”
5. Don’t be afraid to let go (of people or things, but especially to toxic or destructive people)
6. If you HAVE to give a F*ck because its beyond your control, make plans to recharge your batteries afterwards
The Little Book that Beats the Market | Joel Greenblatt
Choosing individual stocks without any idea of what your looking for is like running through a dynamite factory with a burning match. You may life, but you’re still an idiot.Joel Greenblatt
The Little Book that (still) beats the market is a guide to implementing a simple mathematical formula for deciding whether to buy a stock, in order to generate long term profit. Joel Greenblatt follows in Benjamin Grahams footsteps as a fundamental value investor, much in the same way as Warren Buffet. Just like Buffet, Greenblatt was able to produce seriously amazing returns; his investment firm produced over 40% annualised returns for over two decades running!
Greenblatt echoes the virtues of value investing that he learned from Graham; which means buying stock with high returns (on capital) whenever it is undervalued by the market, and therefore with good long term growth potential. Because it is under priced now, if you wait long enough it will go up to the average (or maybe beyond) meaning a gain for the value investor. The formula for working this out involves;
- Calculating earnings yield (quantitative, inverse of P/E ratio) to see if the company stock is good value. For reference, a P/E of 16.4, or earnings yield above 6% is generally accepted as the long term average.
- Calculating return on capital (quantitative) to see whether it is a good company or not. Grenblatt suggests 25% RoC as a minimum threshold.
- Ranking companies on these two factors combined (quantitative) to find
- Analysis of company fundamentals or warning signs (qualitative). Greenblatt suggests ruling out any company with a P/E below 5, as well as utility, financial and all ‘foreign’ stocks.
- Buy, hold and being patient over the long term
Whilst Greenblatt suggests long term as being one year, in my (humble and uneducated) opinion I prefer to side with Buffet, with long term in my vocabulary equating to buy and hold ‘forever’ (or at least 50+ years). I also understand his home bias and fear of foreign markets, however I feel my investment risk in these are mitigated through the diversity of my ETFs.
I like how Greenblatt explains the craziness of the stock market and how peoples irrational investing leads to market volatility – he uses a great explanation of a kid selling chewing gum (a confectionery business!) to make his points over his 13 chapters. In the end though, He sides with Buffett and encourages investors to consider index funds like Ultra low cost diversified stock market ETFs over trying to pick individual stocks.
The Power of Habit: ‘Why we do what we do in life and business’ | Charles Duhigg
The key to exercising regularly, losing weight, raising exceptional children, becoming more productive, building revolutionary companies and social movements, and achieving success is understanding how habits work.Charles Duhigg
Duhigg’s ‘The Power of Habit’ is behavioural psychology book and a New York Times best seller. Duhigg challenges you to view the the way you go about life and behave; your habits. He explores scientific studies of how habits are formed in our brains, and showcases different examples of how this can be beneficial or negative, and how habits can be be broken and rewired.
For people looking to change habits which are difficult to break, Duhigg’s observations are a game changer. He explains how implementing keystone habits has led to the success of people like Olympic swimmer Michael Phelps and heroes of civil rights movements like Martin Luther King, Jr. He also shows how businesses like Procter & Gamble and Target have used the power of habit to earn billions of dollars in revenue.
The Automatic Millionaire | David Bach
The fact is, none of us really has a choice. We are all playing the money game whether we want to or not. The only question is – are we winning?David Bach
Bach offers the reader a simple, step-by-step guide for gradually building wealth. By relying on constant, automatic small transactions and investments, Bach shows that even those with poor discipline can become Millionaires
Bach famously tells his story of learning the power of investing with McDonalds. When he was a child, his grandmother took him to the restaurant and told him “There are three types of people in the world. 1. Those who eat at McDonalds. 2. Those who work at McDonalds, and 3. Those who invest into McDonalds”. She helped him buy his first share in McDonalds stock and Bach took away a lifetime lesson; investing early was the key to success in life.
The Automatic Millionaire provides key lessons for those striving to generate wealth. One of Bach’s most striking lessons is called ‘The Latte factor’. By saving just a little each day, you can retire early and live rich for the rest of your life; consider the cost of $10 a day on a small expense like Coffee; if instead you saved and invested this money into index fund ETF or mutual funds, over a typical 40 year working career you’d have $1.9 Million! By boosting your saving, you can save and invest enough to retire early!
Bach also covers some critically important lessons, like paying yourself first. To put it another way, paying yourself first means that instead of spending first, you invest your money first. You can then spend what is left over after saving and investing. This really challenges you to consider your way of life, lifestyle, the way you make decisions and spending patterns.
The main theme of the book however, is the power of automation. By automating your saving and investing, you can achieve the power of a disciplined investor without using willpower or being disciplined yourself. You wont even notice the money is gone. This also removes the human factor from the investing equation, meaning your less likely to stuff up your own investments by selling during or after a market crash!
Sweet Poison | Dave Gillespie
Sweet poison is a pretty darn good book, and a quick read. Its about the dangers of High Fructose Corn Syrup and its extensive use in the food industry.
David Gillespie is a lawyer who found himself over 40kg overweight. Its written as his journey to self discovery as Gillespie explores his own diet and health issues and learns about what is making him sick and how he can become healthy again
He explains his learning process and journey. Gillespie has no formal health or medical training, but he is clearly a very intelligent person. He references numerous academic papers and specialists (but at times could probably do with a bit tidier and more referencing) but it certainly makes sense and he backs up his arguments well.
He concludes by offering readers some guidelines about food, being savvy and avoiding the hidden junk in our food. I read this book because it was given to me by a family member, and I have since bought a few paperback copies of it as gifts to give out to my close friends.
The Richest Man in Babylon | George S. Clason
Advice is one thing that is freely given away, but watch that you only take what is worth havingGeorge Clason
The richest man in Babylon is a pragmatic account of financial advice told through parables and stories from ancient Babylon. The Book is a classic, and demonstrates the power and wealth generation available when you begin saving a part of your income, investing it wisely and protecting it. Clason echoes the virtues of lending money instead of borrowing it, and the dangers of personal debt
One of the biggest themes throughout The Richest Man in Babylon is the simple act of living below your means. By living below your means, you are able to generate surplus wealth which can be multiplied with prudent investing. You also avoid the stress and wealth destruction which comes with taking on personal or non productive debts. The Richest Man in Babylon also talks about the importance of hard work and persistence, in order to’swing the odds in your favour’.
This is a very quick read, and an absolute must read on the path to Financial Independence. It also makes a great gift for someone who maybe hasn’t quite got their shit sorted yet.
The Magic of Thinking Big | David J Schwartz
Do what you fear and fear disappearsDavid Schwartz
I have to thank Mr Money Mustache for putting me onto this one. The Magic of Thinking Big is all about self confidence and believing in yourself. Schwartz teaches you to think big, and about the power of positivity and mindset when you want to achieve your goals.
Rather than be intimidated and fear the unknown, Schwartz compels readers to always be open to new ideas and learn something new whenever you can. By pushing yourself out of your comfort zone you find an amazing region of personal development and growth, and an ability to achieve even bigger goals.
By shutting down the negative voices in your head, you become more and more successful every day. Schwartz urges readers to go through their positive affirmations every day, and even to write and read them out loud. These affirmations are great things about yourself that you and other people like (for example you might be a really great Pilot, or you are able to make other people feel great and laugh by telling funny jokes).
Going even further, Schwartz suggests to create an environment of positivity around you; surround yourself with high quality and positive people. Only take advice from those who’s values align with yours, who you want to be like and those who have achieved what you wish to. This might mean focusing your efforts away from ‘Negative Nancies’ or ‘Morale Vampires’ who have limiting beliefs and mindset. You are on the path to success with your abundance mindset and the magic of thinking big.
Early Retirement Extreme | Jacob Fisker
When you identify with an object, you’re defined by the object, then controlled by it, and ultimately owned by it. If you relate to your possessions, you’re owned by your stuff, and it will make many of your decisions for you. This trap is not only mental, but also physical.Jacob Fisker
Early Retirement Extreme is a monster read. Fisker has some pretty great gems of wisdom expressed in the book, but it will take you a few weeks to get through it all and re-read the important bits. This is probably not the best ‘first book’ for FIRE starters (as it will take some time to read and digest) but it is certainly a must read for anyone on the path to FI.
Fisker discusses how the consumer culture in the western world has led to a culture of decadence and waste. Not just waste in terms of rubbish produced that pollutes the environment, or waste in that a third of all of bought groceries end up in the bin, but that we waste so much of our time, energy and happiness. By practising mindfulness (not necessarily minimalism but that helps) and adopting new (and some extreme) ways to become more efficient, we can work out how to meet out needs whilst protecting our precious freedom; our time, energy and happiness.
Fisker discusses the virtues of in sourcing (doing work yourself!) with his concept of the renaissance man. The Renaissance Man is the one who develops a multitude of diverse and interesting skills which cross mesh and interlink with one another to allow you to achieve fantastic results. For example; learning to grow a garden can provide you with fresh organic produce, and this can in turn lead you how to cook delicious home made meals from scratch. Both activities get you active and involved with the family, and lead to spending quality time together. Eating delicious and healthy home made meals leads to improved health, and helps you to be more active which of course has an amazing snowball or spiral affect on improving your quality of life.
The Bogleheads guide to investing | Taylor Larimore
Wise investors won’t try to outsmart the market.They’ll buy index funds for the long term, and they’ll diversify.John C. Bogle
The Bogleheads’ Guide to Investing is a no nonsense, straight up guide to investing for everyone from teenager, to families and single parents and even those approaching retirement! The Forward is by John (jack) Bogle who created Vanguard, the worlds largest mutual fund and provider of exchange traded index funds. John Bogle is the original O.G. FIRE blogger and investor!
The Bogleheads is a name given to the giant fan base he has amassed (and you can visit them at https://www.bogleheads.org and take part in their forums with over 50,000 active participants). Rather than worry about the vagrancies of Mr Market and volatility, Bogleheads are investors who have adopted John Bogle’s investing philosophy of being “lazy”.
The guide covers an array of topics with interesting discussions on insurance, behavioural economics, ways to save money and of course, how to invest and structure a modern investment portfolio. The book is written for new investors, and shows through countless examples how dumb actively trading the market is, and how active fund managers bleed their customers dry with fees whilst consistently under performing the market.
The Guide features an entire chapter devoted to “Tuning out the noise” (ch 18) which implores investors to “ignore the barrage of investment sales pitches because their promises are fictitious at best and financially disastrous at worst”. Focusing on a passive index strategy, by structuring your portfolio with index funds like the S&P 500 stock index. Having not bought individual stocks in over 30 years, John Bogle is a leading proponent of index investing.
John Bogle’s top tips are;
- Stay the course – “you must weather any storm, because even though the market is risky, over time it still produces better returns than any alternatives”.
- Beware the experts – Money managers more likely have their best interests at heart, not yours. When discussing the GFC Mr Bogle questioned “How could so many highly skilled, highly paid securities analysts and researchers have failed to question the toxic-filled, leveraged balance sheets of Citigroup and other leading banks and investment banks?”
- Keep costs down – “In investing, you get what you don’t pay for. Costs matter. So intelligent investors will use low-cost index funds to build a diversified portfolio of stocks and bonds, and they will stay the course. And they won’t be foolish enough to think that they can consistently outsmart the market.”
- Don’t get emotional – “Eliminate emotion from your investment program. Have rational expectations for future returns and avoid changing those expectations in response to the ephemeral noise coming from Wall Street.”
- Own the entire stock market – Invest in index funds!
From 0 to 130 properties in 3.5 years | Steven McKnight
You will only ever do your first deal once. From then, as your experience broadens, you’ll become more and more confident in dealing with agents, inspecting property and making offers. Its no where near as scary the second time around. If you don’t know the area like a local – don’t invest there. If you want to be treated like a local – look like a local!Steven McKnight
McKnight has a series of property investing books, and is himself a highly successful property investor and popular author. His common sense books are filled with practical step by step tips and guides and this is probably one of his best reads. Although it should be treated as educational material and not a financial guide
From 0 to 130 properties in 3.5 years stresses the importance of stripping away the emotion from property investing. The only decision worth considering is how much this investment should make, weighed up against how much it costs, and what the risk of losing your capital is. His key take home point is not to get emotional about any property you invest in.
His strategy is that you should only ever buy houses for people to live in. So long as people continue to need to live in houses, investing in property means you’ll ‘buy problems and then sell or rent out solutions‘. McKnight discusses the two main choices in real estate investing: Investing for cash flow, or investing for capital appreciation.
McKnight echoes the important messages of self education especially when it comes to the areas your investing in – you need to invest like a local! A part of this is the critical skill of networking and negotiation. Networking with other real estate investors is one of the simplest and most cost effective ways to educate yourself.
He also talks about some hard facts of real estate investing. It is active. It takes a lot of time. There are Risks. But his common sense and practical approach to investing helps minimise these risks; avoid properties that are cashflow negative or ‘suck away your cashflow’, and look for properties that make money from the instant you get them (by negotiating and paying the right price, you lock in your profit upfront). He describes how the only real way to expanding your property portfolio is by being able to access the equity that you earn from capital gains.
Finally, one of the best take-homes from his book is this: Money can be replaced, but time can’t!
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money | Carl Richards
Secrets of the Millionaire Mind | T. Harv Eker
What to expect when your expecting | Clifford Neppe, Heidi Murkoff, and Sharon Mazel
Your money or your life | Vicki robins
Tough times never last but tough people do | Robert Schuller
Why you act the way you do | Tim Lahaye
The four hour work week | Tim Ferriss
The lean start up | Eric Ries
Extreme ownership how US navy seals lead and win | Jocko Willink, Leif Babin
Economics explained |Robert Heilbroner, Lester Thurow.
A Random Walk Down Wall Street | Burton Malkiel
The Intelligent Asset Allocator | William J Bernstein
Towards Rational Exuberance | B. Mark Smith
I will teach you to be rich | Rahmit Sethi
Guide to the Good Life: The Ancient Art of Stoic Joy | William B. Irvine
Struck by Lightning: The curious world of probabilties|Jeffrey Rosenthal
The Only Investment Guide You’ll Ever Need |Andrew Tobias
Naked Economics: Undressing the Dismal Science | Charles J. Wheelan
Guide to Economic Indicators: Making Sense of Economics | Richard Stutely and The Economist
The Four Pillars of Investing | William Bernstein
How the Economy Works: Confidence, Crashes and Self-Fulfilling Prophecies | Roger E.A. Farmer
Scratch Beginnings: Me, $25, and the Search for the American Dream | Adam Shepard
Plenitude: The New Economics of True Wealth | Juliet B. Schor
What Technology Wants | Kevin Kelly
The Life You Can Save: How to Do Your Part to End World Poverty | Peter Singer
Against Thrift: Why Consumer Culture is Good for the Economy, the Environment, and Your Soul | James Livingston
Nudge: Improving Decisions About Health, Wealth, and Happiness|Richard H. Thaler, Cass R. Sunstein
7 Laws of Money | Mike Phillips
The four hour body | Tim Ferriss
The simple path to wealth | J L Collins