Money For Life: Build the Wealth You Need to Live Your Dream [Hardcover]

Robert Sheard (Author)

Book Description

Publication Date: August 22, 2000

THE 20 FACTOR PLAN FOR ACCUMULATING WEALTH WHILE YOU'RE YOUNG The author of the bestseller The Unemotional Investor and former Motley Fool columnist offers an unconventional approach to financial independence designed for the boon generation Avoiding the traditional approach to retirement at 65, Robert Sheard contends that restless baby boomers no longer need to wait until old age to quit working and live the life they've always dreamed of. By following the very specific guidelines and investment techniques that Sheard sets out, readers will be able to calculate exactly how much income they need to live on without a job, how to create a nest egg to generate that right amount of income, and how to live off that money for the rest of their lives. Combining practical-living advice with smart investing know-how, the author argues that no one needs to think of retirement as a function of age - financial independence and lifestyle choices determine when and how to "retire." His concrete and very workable blueprint for implementing the saving and investment strategies that will bring those goals within reach will be a liberating revelation to Sheard's many fans. Whether age 35 or 75, whether they want to quit work and spend their days on the golf course, start a business, or simply take a few years off to go adventuring, Money for Life provides readers the tools and knowledge they need to live comfortably on their investments and realize their dreams. The Unemotional Investor sold 70,000 copies and was a national bestseller, appearing on the Business Week, list and the New York Times extended bestseller list.

Editorial Reviews

Amazon.com Review

Most workers get it wrong: instead of saving for retirement, they should focus on investing for financial independence. Retirement, Robert Sheard argues, is an outmoded concept left over from the days when you worked for a company from your 20s to your mid-60s, retired with a gold watch and a pension, and then died a few years later. Today, the average worker will switch careers three times (something Sheard, now an investment adviser, notes he accomplished before the age of 40). And, of course, that worker will probably live far longer than pensioners of past generations. What that worker wants is the ability to do something he or she loves, no matter if it brings in revenue. In other words, an investment plan that will support his or her living expenses indefinitely.

Money for Life offers a way to do just that. The cornerstone of Sheard's plan is what he calls his "20 Factor Formula." You figure out your projected living expenses if you retired today (he offers tips to help you include everything), multiply by 20, and that's what you need in your portfolio to achieve financial independence. To amass that portfolio, Sheard offers an equally simple solution: forget diversification. He argues convincingly that investing in an array of stock and bond funds is a loser's game; your returns will always trail those of the S&P 500. You could just put all your money in an S&P 500 index fund, but Sheard shows a scenario in which a hypothetical investor did just that in 1960, and by 1983 his portfolio was busted, a victim of inflation and a couple of devastating bear markets. Instead, Sheard recommends the Dogs of the Dow approach, in which the lowliest of the Dow's 30 stocks are bought each year. As he showed in his previous book, The Unemotional Investor, this strategy has gained 2.5 percent more per year than simple index investing. Index investing is a complete no-brainer, but the Dogs of the Dow isn't much more difficult. Sheard says it takes about 30 minutes a year to pull it off. He balances the book with lots of other financial advice--of particular interest are his contrarian opinions on 401(k) investing--and maintains a nice levity throughout. It's genuinely fun to read, and by the book's end, you feel as if you've gained a lifetime's worth of investment advice with just a few leisurely afternoons of reading. --Lou Schuler

From Publishers Weekly

An investment adviser and author of The Unemotional Investor, Sheard believes that most people erroneously look toward retirement as a financial goal. Instead, he says, everyone should strive for financial independence, the point at which one has accumulated enough money that one no longer has to work. Obviously, this amount will vary by age, lifestyle and other considerations, but Sheard offers a foolproof formula that works for everyone: "Financial independence = annual income requirement x 20." To determine the annual income requirement, readers must determine what they currently spend on housing, income taxes, healthcare, transportation, etc., as well as any potential sources of future income (such as pensions). Sheard's strategy is straightforward and easy to understand. Yet, while financial independence is certainly a goal that people should work toward, many readers will need more help applying this formula to their own finances. The second half of the book offers advice on working with financial advisors, using index funds and selecting brokers, but some of this advice may confuse inexperienced investors. And Sheard touts the benefits of buying stocks on margin; a tactic that is too risky for most people. For readers already well versed in handling their investments, this book offers a fresh approach to long-term financial planning; beginners should look elsewhere. (Sept.)
Copyright 2000 Reed Business Information, Inc.

See all Editorial Reviews

Product Details

• Hardcover: 288 pages
• Publisher: HarperBusiness; First Edition edition (August 22, 2000)
• Language: English
• ISBN-10: 0066620430
• ISBN-13: 978-0066620435
• Product Dimensions: 9.2 x 6.4 x 1.2 inches
• Shipping Weight: 1.2 pounds
• Average Customer Review: 3.7 out of 5 stars  See all reviews (7 customer reviews)
• Amazon Best Sellers Rank: #3,932,070 in Books (See Top 100 in Books)

More About the Author

After graduate school (English lit.), I started working as a researcher and columnist for The Motley Fool. It was during my days with The Fool that I began writing my two investing books. Since those days, I've been a portfolio manager, the owner of an independent bookshop, and most recently have returned to the classroom to teach American literature. My goal is to get back into writing full-time, although probably not in the investment arena.

When I'm not reading and writing, I'm either riding my bicycle or following the fortunes of Newcastle United and Reading football clubs.

Customer Reviews

Most Helpful Customer Reviews

26 of 31 people found the following review helpful:

1.0 out of 5 stars Save your money!, January 15, 2001

By A Customer

This review is from: Money For Life: Build the Wealth You Need to Live Your Dream (Hardcover)

This book was a great disappointment. It contains nothing new, provocative or even interesting in the world of financial planning.

It is painfully obvious that there was no real purpose in writing this book other than for the author to cash in on the hot "personal finance" category in book sales. Moreover, while the author does not quite stoop to the level of shameless self-promotion of the likes of, say, Wade Cook, he does nonetheless use the book to promote his new money management service as a way to achieve ones financial goals. Shame on you, Mr. Sheard!

The "advice" in the book can be summarized in a few sentences: 1. Keep saving and investing until you have an amount saved up equal to 20 times your annual needs. (I.e., if you need $50,000 per year to live on, you need to save $1 million.)

2. Keep it all in the stock market and withdraw 5% a year to live on.

3. Quit working and do what you want. Unless you want to keep working, in which case you are free to continue doing so.

4. Oh, yeah. Make sure you make 15% a year on your stock market investments otherwise you'll run out of money.

Of course, it's numbers 1 and 4 that may be a little difficult to acheive. Not to worry, though, the author recommends that you max out on your 401(k) and IRA contributions, and save 10% of the rest of your paycheck every month. (What novel concepts!) As the the 15% annual rate of return, the author conveniently ignores the nasty little fact that the long run return on stocks (up until the last decade) is about 10.5% a year and says you only need to follow a consistent strategy, like the Dogs of the Dow (which the author admits he himself doesn't follow) to make the magic 15% annual rate of return. And if you can't do it yourself, you can always hire his money management firm (for an annual fee of 1.5% of your assets, which means he will need to make 16.5% on your money annually for you to get 15%).

Other than that, the book says to make sure you're adequately insured and lists few discount brokers (Brown & Co., Ameritrade) and well known web sites (Yahoo, Motley Fool) that you might want to check out to help with your stock selection and purchases.

And that's it! Like I said, all in all the book is pretty worthless.

There are far better personal finance books out there. (The one by Jane Bryant Quinn is one of the best.) Don't waste your money on this one.

10 of 12 people found the following review helpful:

4.0 out of 5 stars Good ideas with a few dubious details, September 13, 2000

By 

Jussi Bjorling - See all my reviews

This review is from: Money For Life: Build the Wealth You Need to Live Your Dream (Hardcover)

Sheard's explanations of how to think about savings are dead-on, and everyone could benefit from a more thoughtful approach to savings. For this reason alone, the book is worth buying. His preferred investment strategy is essentially an old-school value-investing approach, which is certainly viable but not clearly better than index investing, as Sheard claims. So buy it, read it, and take the discussion of savings goals to heart, but consider other investment strategies.

7 of 8 people found the following review helpful:

5.0 out of 5 stars A great starting point to Achieving Financial Independence!, May 8, 2001

By 

David Lubin (San Diego, California United States) - See all my reviews

This review is from: Money For Life: Build the Wealth You Need to Live Your Dream (Hardcover)

Money for Life is an outstanding book for those who wish to achieve financial independence by living indefinitely off investment gains. A basic stock market investment plan is outlined in addition to sound financial tips relating to IRAs, insurance, wills and debt management. Although the concepts of "paying yourself first," setting aside 10% of your pre-tax income and engaging in mechanical, unemotional stock market investing to beat the S&P 500 are not entirely new, this book presents them in an entertaining, fresh, new (and unbiased) light. It has motivated me to reexamine my own finances and plan for a future free from monetary worry.