Customer Reviews

Automatic Wealth: The Six Steps to Financial Independence

5 star:		(29)
4 star:		(11)
3 star:		(7)
2 star:		(6)
1 star:		(5)

 

 

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.

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.

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.

This book offers sensible and common sense advice on how to improve your life by changing focus, habits and so on. It advocates among other things to start your own business and became the best employee. All very good and logical, but beware, some of the advice is not for everybody and may get you in trouble. Not everybody, for example, will do fine in a marketing or sales position, as a matter of fact if you don't have the right skill set it may get you fired.

On the good and refreshing side, this one preaches and encourages hard work and dedication, it is no a get rich fast scheme,

After finishing the book you realize that you probably knew most of what it discussed. It may spark your interest to try new things, which is good, very good, but remember to educate and inform yourself first, otherwise you may be sorry.

Michael Masterson talks about the Six Steps to Automatic Wealth and I get the impression that his target audience is employed middle-aged professionals who are unhappy with their income level and worried about retirement. His book is an amalgam of motivational philosophy derived from Napoleon Hill, Dale Carnegie and his own experience mixed with wealth building advice. It's all good but becoming an aggressive salesman/superstar employee isn't a panacea for everyone. For example is a fast food worker supposed to suddenly build a better taco? Would a janitor give the floor a super duper shine? Of course the author doesn't really have working folks in mind. This book and others of it's kind is really meant for dissatisfied yuppies. Furthermore the implied suggestion of making friends with those that have what a person wants and needs to get ahead strikes me as mercenary and false. Nevertheless I do like what the author has to say about real estate and bonds. I'm pleased to report that the library has the book.

Masterson begins like few people do when writing about wealth. In a very kind way he shares with you that if you are 25 and follow the millionaire next door strategies you will indeed grow wealthy...and you will. But if you are 40...or 50 you haven't got a chance beginning with those strategies today.

Masterson then eliminates the should be obvious but never is...fact that wealth doesn't happen on accident. You'll need to plan and do. (More rare human behavior)

More good advice (it's all pretty much good advice in this book by the way) then he comes to the point. Do something that will make you rich. Doctor, dentist, engineer: You don't have to be in business. Pretty much everyone else needs to be in an entrepreneurial venture. And of course this is the only viable option for building wealth for the 40 plus who isn't one of those professions (or like them).

He shares some useful tips about passive income and indeed that is WHERE it IS all at in wealth building. If you got it, you get it, if you don't...you are not doing it right.

A really impressive primer on wealth building. I enjoyed it. I always pick up ideas from Masterson and I find him one of the sharpest minds in business.

Kevin Hogan

Author of The Science of Influence
and
The Psychology of Persuasion

Over the years I've purchased all too many books that ended up being filled with everything from impossible stock picks to investment ideas that were either too risky or involved strategies that would take 50 years before I'd see a significant return on investment.

I was thoroughly impressed with "Automatic Wealth: The Six Steps to Financial Independence", written by Michael Masterson. You won't find gimmicks or feel that you've been ripped off after you finish reading this book. I honestly came away feeling that I learned a number of great strategies (in this case, they are called The Six Steps)that I'll begin to incorporate tomorrow! That's how helpful his Six Steps are and how confident I am that I've gained incredible financial advice-someone shared their simple secrets. The other great thing about this book is that his investment iformation was new to me and wasn't repitition of many of the things I learned in business school or through my own personal business experience.

Wouldn't we all like to be self-made millionaires like Michael Masterson and so many of those that he mentored? I'm very confident, without any fear or hesitation at all, that I can finally make "Automatic Wealth" happen in my own personal life. I've just been missing the right Six Steps and you'll know what I'm talking about when you read the book. I wrote the review because I became so excited and confident about my future wealth-building-something I want to pass on to others.

Masterson clearly teaches us the six principles of creating "Automatic Wealth" and how we can immediately become personal "automatic wealth-builders." At first, it might sound all too simple. But Masterson wasn't born into riches, rather he worked hard to develop his own wealth. Anyone who practices these principles will see the fruits of their own success and financial independence and it will happen rapidly.

First you will face your own "Financial Facts", then you'll "Develop your Wealth Strategies" and finally you'll move towards "Developing Wealthy Habits." These first 3 steps, much like the final three, are presented in a simple and clear fashion. The final steps involve "Radically Increasing Your Wealth", "Making Money While You Sleep", and lastly, "Retiring Early."

This is brilliant information that will teach us all how to become financially independent and enjoy all the pleasures that come with embrassing "Automatic Wealth." I was going to close by wishing you much luck, however I'm 100% confident that FINALLY a financial independence book has come along that will allow anyone to dive into financial freedom and personal success.

Happy Reading to Everyone!

Peter Cannice from Scottsdale, Arizona
Email: Horsepete@aol.com

I have been closely studying Michael Masterson's work for approximately five years. I highly value his approach and agree that many methods do work. Upon learning that Mr. Masterson is writing a book, I was very eager to read it. The Automatic Wealth starts great. The first half of the book is full of valuable insights. It gives many examples from the everyday life and first of all many examples how actual people, including the Author enjoyed results of the Automatic Wealth. The tension is high until Mr. Masterson starts to go into details. The high energy that emanated from the first pages, suddenly is gone. It felt like air getting out of a tyre. The energy in the book got so low that I had to force myself to read to the end. I am not sure if it was a change of focus on Mr. Masterson's side, or was it because the examples and advice are exclusively for an American reader. Or maybe it is because I was reading the Automatic Wealth after finishing Jack Canfield's "The Success Principles" and Harv Eker's "Secrets of the Millionaire Mind". Both books are written by people who similarily "walk the talk". Their great value is that the message is valid for any reader, no matter where she/he may live. Mr. Masterson's advice even though valuable as an idea, is very geographically limited.
It doesn't change the fact that I will be continuously studying Mr. Masterson's ideas, but as far as the Automatic Wealth is concerned I am sincerely disappointed.

There are two types of get rich books: those written by professional speakers who make a living telling others how to be successful, but whose only achievements are writing books and giving talks on how to get rich; and those written by people who actually ARE rich and have become self-made multi-millionaires in REAL businesses, not speaking and writing books. Masterson is firmly in the second category. I have been fortunate enough to be involved with him in several of his businesses, and he has a pure midas touch for making successful businesses, which is teachable and transferable -- and which you will learn by reading his book. You will never read a more important wealth building book in your entire life.

I had high hope when I pick up this book. Although there are good principles and ideas in the book, but the title is somewhat misleading. It is anything, but auomatic. Doing what author suggested takes a lot of work.

It is not easy to become expert in stock investing, real estate investing, starting part time business while hold a full time job (which is in some way is what author suggested that everyone should be doing).

I do like author's last charpter about the concept of retirement - the traditional thinking about retire young and doing nothing but enjoy golfing, watch TV and just relax really does not work. I know this first hand. You must have some meaningful work to do during those retirement years. It is something most people really don't plan.

Overall, there are good contents in the book, but there are other better book on the same subject.

Robert
San Jose