Customer Reviews

The Armchair Millionaire: Build and Protect an Extraordinary Portfolio, Even on an Ordinary Income, by Following One Commonsense Investing Strategy

5 star:		(7)
4 star:		(3)
3 star:		(1)
2 star:		(2)
1 star:		(1)

 

 

This book is a well-written cross between John Bogle's Common Sense on Mutual Funds and Suze Orman's The Courage to Be Rich. Emotions are the biggest challenge that investors face. Although stocks have always gone up in the long-run historically, it is very gut-wrenching to lose money in sharp bear markets (such as the Nasdaq has been experiencing since March 2000). As a result, many people can't stand it, and sell out at low prices after horrible losses. These same people are often inspired by euphoria at high prices to buy too much.

The book seeks to solve this problem by putting you into an investment plan that you can easily follow, spend small amounts of time on, and should give you superior investing rewards compared to most alternatives. The proposal is to put all the money you can into tax-deferred savings, pay yourself with automatic deductions ten percent of your after-tax earnings and invest it monthly on an automatic basis to get cost-averaging benefits, invest the money equally in S&P 500, Russell 2000, and the Morgan Stanley EAFE index funds, and start doing this today.

I have two basic problems with the book that caused me to grade it down a little. First, that exact mix of index funds isn't perfect for everyone. If you are fairly near retirement, you should be easing into money markets (see Charles Schwab's new book). If you are quite young, you should probably favor the Russell right now over the other two. Second, we have a market that is heading south very rapidly. By waiting a few weeks, you can probably get a much better deal on stocks. Although normally you should not try to time the market, when you are in the middle of a collapse, I would suggest waiting a bit to start. Many stocks could still fall another 50 percent. Why start out with large losses? So, if you start today, I'd say be heavy on money market funds of government securities.

If you have severe psychological hang-ups about money and investing, this book won't be heavy duty enough for you. If you are just open minded and ignorant, this book should be helpful.

I really liked the writing style. It is simple, direct, and filled with helpful metaphors. "Investing is a lot like buying a car." "As a consumer, you've got many choices but there's no such thing as the 'best' car for everyone." "[There's] only one that's right for you." " . . . [A] solid investment strategy is every bit as crucial as a car."

The book also offers the back-up of a web site where you can get advice from others who are further along with their investing. This can help you feel more confident at times like this when television is blaring bad economic and financial news. The book is enlivened and improved by many quotes from on-line comments and questions by investors.

The attitude you are encouraged to develop is one of setting a goal and then being a common sense, do-it-yourselfer in pursuing this through a plan of savings and investing that gives you the portfolio that will succeed. You are reminded that "even millionaires can spend their way into the poorhouse."

I thought that the best piece of advice in the book was to "take all the ideas you have about investing and throw them right out the window." Most inexperienced investors have very peculiar and incorrect ideas about investing. Consciously discarding those, while being skeptical, is a good approach as you seek better information. But remember, "your investing plan and your relationships will work only if you're going to stick together through ups and downs, for better and worse."

After you review this book, be sure that you do set explicit financial goals that you write out as a first step. Then, be sure you do develop a plan to meet those goals that avoids any unnecessary risk.

If you are a new investor, I would still like to see you read Rich Dad, Poor Dad and Common Sense on Mutual Funds before you finalize your plans.

May you develop the financial resources to meet your goals in a way that is comfortable and pleasant for you!

Besides the fact that the authors manage (I think successfully) to present themselves clearly and in a straightforward manner, I think what's worth appreciating about this book is what's NOT in it: It has none of the typical "my-idea-is-newer-and-better-than-yours" blather that makes up so many investing books these days.

Instead, the authors promise to keep it simple and they do just that. It's tempting to want to ask, "what's new in this book." I think what's new is the fact that it's got an easy and proven plan to build a million dollar portfolio. Proven with the author's own money!

That's pretty good stuff for a $20 book.

The authors show great restraint by not dwelling on the gobs of investing science behind the Armchair Millionaire's Five Steps to Financial Freedom. In fact, there's enough Nobel prize winning research behind their method to choke a horse. They mention it along the way but avoid the temptation to bog you down in it. Instead, they stick to their own self-imposed line and keep it simple.

The risk of this is they can be called simplistic. The value, of course, is that they provide all the tools you need--and only those tools--to do-it-yourself. In other words, they'd rather you successfully start your own portfolio than convince you that they are smarter than everyone else. Rare indeed, these days.

My recommendation is to give this book to people you care about--People who you want to succeed. There's an old saying, you can lead a horse to water but you can't make them drink. This book is the water. It's got everything you need to build financial success for yourself. What you do with the information contained inside is up to you.

PS: This is my first book review--I finally felt I could say something that might help someone make a smart decision. Hope you like it!

I'm a brand-new investor. I don't have a lot of money, either. I first picked up this book because I liked the title. Plus the chair looks really cozy, doesn't it? When I read the inside cover of the book, it sounded like the perfect book for me.

I like how easy it is to read. It's funny, too. I also like that it has stories about real people and money. Mostly I like that the plan is really simple. Even though I don't have a lot of money and I don't know a lot about investing yet, I can start using the plan right away. I just need to pay off some little debts first, and the book helped me figure out how to do that too.

I live in a rural area so there aren't really any investment classes nearby. Nobody I know ever really talks about money, either. This book helped me learn more without any classes. I will definitely recommend this book to some of my friends who want to learn how to invest, too.

I haven't looked at the website yet. I hope it has even more good information.

I was pretty impressed with this book. I would give it an A+ except for two reasons. Their strategy suggests a 100:0 asset allocation ratio of stocks to bonds regardless of the investor's age. The other reason is no mention of withdrawal strategies once you get your million dollars. Most computer simulations suggest a maximum withdrawal rate of 4% of assets with an annual inflation adjustment. For these 2 reasons I give the book an A.

As hard and complicated as Wall Street tries to make investing..... to make you think you need a broker, the steps for successful investing are very basic. This book does hit all the basic steps correctly.

#1 is to live below your means so you can save at least 10% of your gross each year and invest it. This sounds easy, but it apparently is not since the average U.S. household credit card debt is now around $8,000 saving rates are below 1%, and average household net worth is below $100K. The book should have mentioned the classic book The Richest Man in Babylon with regards to the merits of living below your means so you have money to invest.

#2 is to use automatic investment so you pay yourself first. If you set up an automatic way of investing, then you can't spend money you don't see. After all, the U.S. government adopted automatic payroll deduction to pay income taxes right after WWII because it was concerned people would not save to pay their tax bill. The government using automatic payroll deduction to assure they always get their share of your money, so why not use this method to keep some of your money for yourself? If you use automatic investment, you get the advantages of dollar cost averaging as well.

#3 is to invest your savings in stocks and use low cost index funds for your investments. The book got it right in saying that stock brokers are not your friends. Often their objective is to move your money into their hands per the classic book Where are the Customer's Yachts?

As I stated above, I think the book should have suggested phasing into some percentage of bond investments as you age. Bond index funds should be used for the bond investments.

As a yardstick measurement of how well one saves and invests, the book should have referenced The Millionaire Next Door's expected net worth formula of 1/10 of your age times your income. This gives you a frame of reference to how well you have saved and invested.

One inconsistent argument the book uses is that institutional investors have roughly 40% of their investments indexed while individuals only have about 5% indexed. This fact is true. However, institutional investors most commonly use a 60:40 stock to bond asset allocation and the book recommends 100:0 stocks to bonds. Most studies show that bonds lower portfolio risk significantly but returns do not suffer dramatically.

Other reviewers suggest reading the web site versus the book. Call me old-fashioned, but I hate reading more than about 1 or 2 screens worth of any web site......I much prefer to print out long web sites to read them. I also like the portability of a book versus worrying about my laptop's batteries running out.

All-in-all, a great primer on successful investing strategies. I would suggest companion books to supplement this book including The Richest Man in Babylon, Bogle on Mutual Funds, The Millionaire Next Door, The 4 Pillars of Investing, A Random Walk Down Wall Street, Wealth of Experience: Real Investors on what Works and What Doesn't.

First, I'll say that this was one of the first 10 investing books I've read as I'm starting the venture to becoming a wise investor.

The point of this review is to say that the book is pointless when the same exact info is given free and more concisely on the website with the same name. This book seems to try and fill up pages by adding fluff to a simple concept: invest 1/3 of your long term funds in each of US large cap stock index fund, US small cap stock index fund, and the large cap asian index fund. The rest of the book is really fluff around this.

I'd suggest simply visiting the armchair millionaire website to read the same info in a few pages.

Also, for the people in other reviews who say the strategy isn't performing well, they are forgetting that this is a LONG TERM strategy, and the reason the funds are currently at -2% return is because the crashes in 2000-2001 are being included. Over the long term, this strategy is considered sound. Thinking short term is entirely opposite to the strategy this book and others suggest.

In short, don't buy the book, just read the site.

I've been reading other investment books and getting bogged down on fancy investing techniques. The Armchair Millionaire came out of nowhere for me and it was definitely the right time to find it. It's straightforward but really smart advice.

A friend of mine gave it to me as a gift. She started her own "Armchair Millionaire" plan some time ago and she seems to be doing really well, even in these difficult, volatile markets. I'm putting my five steps to financial freedom into action now and I'm real excited about it.

Chances are, if you follow the advise given in this book, you will accumlate significant wealth in the long-term. I like how the book tells investors to ignore the "talking heads" on CNBC and other financial outlets. Let the herds follow the headlines and as Buffett would say "be greedy when others are fearful."

If you can spend less, save more, max your tax-deferred investment options and invest for the long-term, you will have plenty of money to bask in come retirement day.

If you're new to investing (like I am), you'll appreciate this book a lot. The authors made sense of a lot of what I've heard about the stock market and mutual funds but never really understood -- things like index funds and why they're better than buying stocks or other kinds of funds.

I particularly liked their advice on budgeting (they say it's okay to skip making a household budget because most people won't ever stick to it, like I never did) and how you can overcome human nature and procrastination with things like automatic investment programs.

I guess it's true that a lot of the advice in the book isn't new, if you're some kind of investor with years of experience. But the way it's all pulled together really makes it easy to understand for someone like me who hasn't been putting money into the stock market for very long.

I also like the way the book brings in all kinds of everyday people with their own tips and advice, not just some expert telling you what to do all the time. These people make it seem possible for anybody to overcome their problems, like how to get out of debt, and get started on the way to becoming a millionaire.

When I finished the book, I really felt like I had learned a lot, not only about how I could be investing better, but also why I had been making mistakes in the past and how I could improve. I guess time will tell -- ask me in 20 years when I just might be a millionaire myself!

The Armchair Millionaire gives everyone the advice and support they need to succed in investing. The book shows you the simple things that everyone can do no matter how small their paycheck is to eventually become a millionaire and retire early. There is great advice on what to invest in safely and how to get the most out of your money by avoiding some taxes. Everyone who wants to become a millionaire needs to read this book.

I agree with the previous comments of there being nothing new introduced in this book. However, if this is going to be your first book ever on investing, it does offer good advice for the novice investor. Just DO NOT use the strategy they propose to making a million through index funds. Last i checked on their website, since it's inception in 1998, their portfolio has gone down 25.36% for a total loss of abut 31,000$.
Man, if i were them, i'd take down the site. It must pretty embarrassing to write a whole book about it being so easy to make a million through their "proven methods", and lose all that money trying to really prove it.