Automatic Wealth: The Six Steps to Financial Independence (Agora Series) [Paperback]

Michael Masterson (Author)

Book Description

Series: Agora Series | Publication Date: February 24, 2006

"I have known Michael for over twenty years. He has one of the smartest business minds I know. When he gives me advice, I pay attention, and you should, too. Automatic Wealth is full of wisdom and insight filtered by a master and brought to you in a well-written and delightful style."
-John Mauldin, Editor of the bestselling book, Just One Thing: Twelve of the World's Best Investors Reveal the One Strategy You Can't Overlook

"I am not usually a fan of this kind of book. One entitled Automatic Wealth made me suspicious. But I am a fan of Michael Masterson, and when I read the book, I was impressed. Masterson manages to go beyond the theory to tell you exactly how real people make real money in the real world. That, I think, is his genius. He's able to open his own eyes and see for himself what actually works. The result is original, clever, and very helpful to anyone who is serious about building wealth."
-Bill Bonner, coauthor of Empire of Debt: The Rise of an Epic Financial Crisis

"Michael Masterson has been a great friend of mine for over twenty years. I know for a fact that the strategy he teaches is the exact same strategy he has personally used to amass extraordinary wealth and prosperity for himself. He's reduced a normally daunting process down to six simple and unfailing steps YOU can absolutely use to vastly and rapidly increase your financial situation, often times doubling and redoubling your wealth every few years. This book will become your financial bible."
-Jay Abraham, author of Getting Everything You Can Out of All You've Got: 21 Ways You Can Out-Think, Out-Perform, and Out-Earn the Competition

"Michael Masterson's book is brilliant and concise, packed with breakthrough insights and unique wealth-building tips. Best of all, it's practical because it combines proven investment and financial planning advice with street-smart business and real estate secrets."
-Robert Ringer, author of Action!, Looking Out for #1, and To Be or Not to Be Intimidated?

Editorial Reviews

Amazon.com Review

The advice and concepts outlined in Automatic Wealth are best suited for those in their 30s-50s who recognize that their current job will never afford them true financial independence. Rather than encourage readers to quit their day jobs today and launch into a new scheme tomorrow, Masterson shows how to turn your skills and experience into significantly more money within seven to fifteen years. For those just getting by, he details how to get the biggest pay raises now and how to move into more lucrative ventures in the near future. For those with some savings, he offers specific advice on building equity and increasing net worth significantly and quickly. Since Masterson made his millions starting and developing small businesses, he encourages people to become entrepreneurs themselves and discusses which kinds of ventures to invest in and which ones to avoid. He also stresses the importance of developing multiple income streams, offering chapters on real estate, stocks and bonds, consulting, direct mail, and other opportunities.

In addition to concrete steps, Masterson also writes about attitude and expectations. His first step, in fact, is to take an honest and realistic assessment of your current financial situation and prepare yourself to change habits. He stresses that you must make getting rich a priority and devote the necessary time to it--act immediately and don't wait until the perfect moment to change your situation (hint: the perfect moment rarely arrives.). Clearly written and filled with informative anecdotes and examples, Automatic Wealth will not make you a millionaire overnight. It could, however, make you one in a decade, and that's a timeline most people can deal with. --Shawn Carkonen --This text refers to the Hardcover edition.

From the Inside Flap

If you're worried about getting burned by financial programs that promise you'll get rich quick—through unlikely stock tips or high-risk trading strategies—and don't have the patience to invest in a savings plan that takes thirty or forty years to take advantage of the "miracle of compound interest," then you've picked up the right book.

In Automatic Wealth, self-made millionaire Michael Masterson draws upon his own experience and that of experts in the fields of retirement, investing, and real estate to offer you a complete program on achieving financial independence. Organized around six key principles, Automatic Wealth will show you how to develop your wealth- building skills and habits and turn yourself into an "automatic wealth-builder."

The proven program detailed throughout this book—one which incorporates nothing but strategies that have personally worked for Masterson as well as the people he's mentored—is broken down into six easy steps:

• Facing the Facts—Here you'll discover what wealth means to you and come to a realistic conclusion about what you need to do to put yourself on a path that will allow you to live well and retire comfortably.
• Plan to Become Wealthy—Offers simple, straightforward advice that will prepare you for your journey.
• Develop Wealthy Habits—Illustrates how the right mind-set can translate into more money.
• Radically Increase Your Income—Provides the framework for making the money you want through real estate, investing, and other proven financial vehicles.
• Get Richer While You Sleep—Reveals the best ways to create a steady stream of income that will automatically flow into your pocket.
• Retire Early—Explores proven approaches to wealth building that will allow you to retire sooner than you might have expected and still live comfortably throughout your retirement years.

Automatic Wealth follows a well-conceived plan that focuses on building income and equity simultaneously. Filled with in-depth insight and practical advice, this unique guide offers specific steps—including how to develop wealth-building habits now and how to develop a three- to fifteen-year plan to reach millionaire status—that will help you live a more fulfilling financial life. --This text refers to the Hardcover edition.

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Product Details

• Paperback: 288 pages
• Publisher: Wiley (February 24, 2006)
• Language: English
• ISBN-10: 0471757667
• ISBN-13: 978-0471757665
• Product Dimensions: 8.7 x 5.8 x 0.8 inches
• Shipping Weight: 10.4 ounces (View shipping rates and policies)
• Average Customer Review: 3.9 out of 5 stars  See all reviews (58 customer reviews)
• Amazon Best Sellers Rank: #275,092 in Books (See Top 100 in Books)

More About the Author

MICHAEL MASTERSON has developed a loyal following through his writings in Early to Rise (ww.earlytorise.com), an e-newsletter published by Agora, Inc. that mentors hundreds of thousands of success-oriented individuals to help them achieve their financial goals.

Masterson has been making money for himself and others for almost four decades. At one time or another, he's owned and run multi-million dollar companies that were public/private, onshore/overseas, local/international, service-/product-oriented, retail/wholesale/direct mail, and even profit/not-for-profit.

Masterson is the author of the Wall Street Journal bestsellers Automatic Wealth: The Six Steps to Financial Independence; Automatic Wealth for Grads... and Anyone Else Just Starting Out; Power and Persuasion: How to Command Success in Business and Your Personal Life (all published by John Wiley & Sons); and Confessions of a Self-Made Millionaire. His next book, Seven Years to Seven Figures: The Fast Track Plan to Becoming a Millionaire (John Wiley & Sons) will hit bookshelves in October of 2006.

Customer Reviews

Most Helpful Customer Reviews

77 of 78 people found the following review helpful:

3.0 out of 5 stars Presents a good way one could get wealthy, April 28, 2005

By 

Matthew A. Lewis (San Diego, CA USA) - See all my reviews
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This review is from: Automatic Wealth: The Six Steps to Financial Independence (Hardcover)

I found this book slightly disappointing, having read so many 5 star raving reviews of it. It is a worthwhile read, for sure. To me, the book was more of a "how I succeeded" book than I was expecting. He is very specific in recommending those things that have done well for him. He offers many strategies for making more money doing specific types of (high paying) jobs, investing in real estate, and starting or financing small businesses. There is good advice in there, and I think it is worth reading for that, since Mr. Masterson is very successful, and whose example to follow but someone successful?

The book's pitfalls to me center around specific investing advice. For instance, he recommends not investing much in the stock market because of its volatility, and talks about how much he likes investing in bonds, since if you hold them to completion you know what you are getting. This is true, but does not consider the effects of inflation, which makes that steady income worth less (whereas stock valuations and dividends tend to keep up with inflation). This is a perfect example where you have to realize he is telling you what has worked for him, but may not be the best advice for many (although I agree with him the stock market is currently overvalued). He also seems to contradict himself when he uses the stock market's historical average of 10% returns to claim you need a net worth of 10 times your living expenses to retire (or 12 times if you're more conservative). In one breath he is poo-pooing the stock market as an investment, then using its average returns in his retirement calculations.

I also wish he didn't refer to real estate investing as "flipping" real estate. All the advice he gives about real estate is sound, explaining rents need to be able to cover your mortgage payments, and that today we're in a housing bubble (here in San Diego it's a bubble bath!). Then later he estimates an average ROI of 25% from real estate investing. Again, after inflation is taken into account, I doubt this to be an accurate figure (even taking into account the leverage involved) in today's already-too-pricey environment. Personally, I believe there will be many people losing a lot of money (read: bankruptcy) in real estate over the next five years. I kind of wish Mr. Masterson hadn't used the term "flipping" houses, as I expect it to be a term that in five years will be looked back on with regret and disbelief, just like "day-trading" is today five years after the Nasdaq crash.

I've spent a lot of time here explaining my negative comments. I do think he has presented a good way one could get wealthy - one that has been proven, which is even better. So I would say read intently his wealth building strategies, but double-check the math on your own.

88 of 95 people found the following review helpful:

5.0 out of 5 stars Solid Advice on Building Wealth, May 1, 2005

By 

L. Masonson (Monroe, New York USA) - See all my reviews
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This review is from: Automatic Wealth: The Six Steps to Financial Independence (Hardcover)

Masterson, a self-made millionaire, puts forth a logical approach for building wealth. He believes that a person, who is willing to put in the effort and time, can amass wealth in a period of 7 to 15 years. I think that timing is a bit optimistic, but even if it takes 20 to 25 years, the end result is still the same - financial independence, more freedom and tranquility. Masterson believes one's primary goal is to accumulate enough capital to generate passive income to pay for life's necessities.

This 271-page book is divided into only six detailed chapters. Each one explains one of the six steps to achieving wealth, which are:
1. Face the facts - you won't get rich saving 10% or more in your pension plan or getting measly salary increases.
2. Plan to become wealthy - This is occurs one step at a time and requires planning.
3. Develop specific wealthy habits - work hard, good a what they do, are extraordinary savers, pay themselves first
4. Radically increase your income - to the tune of 25% to 150%
5. Get rich while you sleep - by receiving passive income
6. Retire early - to live the lifestyle you want

Masterson provides specific examples of each of his six steps, as well as personal experiences and appropriate stories. It all seems very real and makes a lot of sense. He mentions that an individual has to make getting rich a priority and be willing to focus his/her energies on building wealth. He also covers the need to have a detailed short-term and long-term written action plan with specific goals.

The author suggests that everyone choose specific lifetime goals; calculate their retirement income needs based upon an analysis of assets and liabilities, and lifestyle requirements. He then recommends that individuals prepare wealth building goals, health goals, personal relationship goals, and personal growth and development goals. These goals should be set for daily, weekly, and monthly timeframes. He is a strong believer in time management and suggests managing time in 15-minute increments so that multiple goals can be worked on during the day.

Masterson believes that real estate can provide significant income and spends time covering how to invest in real estate and what the income should look like. Although he does mention investing in the stock market, he only invests 2% of his money in it. He is reluctant to plunk down a chunk of his money in stocks because they are too risky for him. Obviously, looking back the stock market's devastation during 2000-2002 and the real estate market's appreciation during that time period, his advice seems right on the mark.

He feels the stock market is a very difficult place to make money, and that investors should tread lightly there. For those who invest, he strongly urges them to cut losses at a specific level (25% for him), and use stop loss orders and trailing stops to protect profits. He does not recommend investing in the market unless you have at least $100,000 to invest.

He is a strong believer in investing a sizable portion of income in side businesses and local real estate to build wealth over time. He prefers investing in income generating real estate, buying rental properties, and buying fixed income investments - holding bonds to maturity to avoid any principal losses due to rising interest rates.

Overall, Masterson does a masterful job of explaining the steps necessary to accrue wealth and enjoy life. For those who believe that investing in the stock market is a critical element in the process, as I do, I recommend a newly published book by Paul Merriman titled "Live it Up without Outliving Your Money" which provides a conservative way to build a highly diversified portfolio that has outperformed the market with less risk.

32 of 34 people found the following review helpful:

3.0 out of 5 stars Great Wealth Building Principles, Horrible Investment Advice, March 30, 2005

By 

M. Dubis - See all my reviews
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This review is from: Automatic Wealth: The Six Steps to Financial Independence (Hardcover)

Author clearly has a strong understanding about how to build wealth long-term through focused habits and methodology of thinking, but stay away from his "stock investment" advice and his retirement withdrawal strategies - they're very misinformed. Clearly the author has never heard of Modern Portfolio Theory nor does he make any consideration to market volatility, inflation, and it's affects on withdrawal.If one thinks they can withdrawal more than 4% of their initial portfolio adjusted for inflation for the rest of their life, they'll be in a very bad situation 20+ years into retirement. The author misses the boat here big-time - dangerously so.

Advice: Buy the Book for its foundational principles of wealth building and his excellent assessment of real estate investing, but completely ignore Chapter 5's discussion on stock picking and double the amount you will need for retirement. All his advice will be flushed down the toilet if you follow those parts of the book. Instead, substitute those sections with the book, "The Four Pillars of Investing" by William Bernstein. The combination of the two books would certainly lead most logical consumers to significant wealth accumulation.