A review of “Invest Your Way To Financial Freedom.”
“Invest Your Way To Financial Freedom” is an upcoming book by Ben Carlson (A Wealth of Common Sense) and Robin Powell (the Evidence Based Investor). I was fortunate enough to be offered an advance copy in return for a review. What follows are my thoughts on the book.
This book is primarily aimed at those at the beginning of their wealth building journey, especially those in their twenties and thirties.
It highlights a number of financial problems that younger people face today, including booming house prices and increasingly less generous pensions (both company and State).
To combat this, the book states that young people need to invest for their futures, and then sets out how and why to go about this.
The central message of the book is that you can’t get rich quick. Instead, it’s the classic advice of spending less than you earn and, importantly, investing the difference in a low-cost, globally-diversified, tax-efficient portfolio of stocks.
This book is packed with a variety of great advice that doesn’t demand any prior knowledge. It walks the reader through the subject, covering a range of relevant topics, from the dangers of inflation and the difficulty of picking individual stocks, to the benefits of time, compound interest, and the simplicity of automating everything.
In particular , I like that an early chapter highlights the important of just getting started, even if initially only with a small, regular investment:
“Just getting started is the key because small wins can help you train your brain to see positive results that can be turned into lasting habits.”
Too often, people are put off by the sheer volume of information about investing out there, and so never get round to actually starting, to their detriment.
Although the book is predominantly about investing, it also covers a few other personal finance topics that you should be on top of before you begin investing yourself. It emphasizes that “bad debt” should be paid off and an emergency fund established prior to investing. It also makes the point that you can only be so frugal; you will eventually have to start looking at increasing your salary, and offers advice on how to do so.
As well as the “how,” the book also talks about the “why.” Why should we bother saving and investing for some distant point in the future? Why shouldn’t we spend money whilst we’ve got it?
The less good
Although the book is generally very good, I have a few minor quibbles.
First, the assumptions made about a person’s income are quite ambitious.
Early in the book, the authors demonstrate the large sums that can be achieved through investing a little and often from a young age, and how this can be increased further by increasing your savings rate by double figures each year (e.g., if you go from saving 3% of your income one year to 4% the next, that is a 33% increase in your savings rate).
I thought this point was well made, and I can see that telling yourself that you’re increasing your savings rate by 30+% each year would be a powerful motivational tool.
However, in order to demonstrate this further, they use a specific example of a 25-year-old earning £40,000 per year and, later in the book, a 30-year-old earning £60,000 per year.
I felt that this potentially undermined the message of their book, and risks alienating some of their audience. A quick search online suggests that the median wage for the UK is ~£30,000 a year, and presumably less than that for a 25-year-old. I think they could have used the median wage as one of several examples, to make the idea of saving and investing more approachable.
Second, for a book aimed at UK readers, I thought there was a lot of focus on US markets rather than global.
Is it fair or accurate to focus on the returns of US equities, before then suggesting that readers should diversify across multiple countries? The huge returns from US stocks might give a false impression of the sort of returns you might expect from a global fund.
Finally, the book falls short of telling a new reader exactly which fund to invest in.
There are of course good reasons for this – costs change, new funds are released and old ones are retired, so it would risk immediately dating the book if they did so. I also imagine there are strict rules about giving specific financial advice, even in a book.
But it does mean that, on finishing the book, a potential new investor would have to do some more research . Fortunately, the book does tell you what to look for in a fund, so as long as the reader bears those points in mind, they should be fine.
Invest Your Way To Financial Freedom brings together the essential information that someone needs to start saving and investing for their future in a clear, concise, easy-to-read book.
The book doesn’t just take one idea and then beat you over the head with it for 170 pages. Instead, each chapter seeks to impart a different, related lesson, all of which combine to give you a solid foundation to begin building wealth.
So, whether you’re a novice who has stumbled across this review and doesn’t know where to start, or you consider yourself an expert who keeps getting bombarded with questions from friends and family and need somewhere to point to, this book is a great starting point.
Invest Your Way To Financial Freedom is available on the 28th of September. Pre-order direct from the publisher or, presumably, any other online retailer.
Disclaimer – a free digital copy of this book was provided to me for the purposes of this review by one of the authors, Robin Powell. Otherwise, I have received no payment for this review, and none of the links contained in this post are monetised / affiliate links.