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The Automatic Millionaire, Expanded and Updated: A Powerful One-Step Plan to Live and Finish Rich Paperback – December 27, 2016
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Despite its sensational title, David Bach's The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich is not a get-rich-quick guide. Rather, the book is a straightforward march through common-sense personal financial planning that suggests readers "automate" their contributions to retirement and investment vehicles. Bach, in fact, calls his model the "tortoise approach" to becoming wealthy by retirement age.In the early part of the book Bach builds on ideas he established in Smart Women Finish Rich and other bestselling titles. His core principle is that, to succeed, you must "Pay Yourself First." In other words, he suggests using pre-tax retirement accounts (e.g. 401(k)s or IRAs) to set aside a fixed, monthly sum of money before considering what is left for living expenses. The "automatic" part of the title comes from Bach's emphasis on using automated payroll deductions to avoid the temptation of using the money to pay today's bills. Bach insists that "regardless of the size of your paycheck, you probably already make enough money to become rich." But his claims that his plan requires "no budget, no discipline," is a bit disingenuous. His discussion of the "The Latte Factor" shows that, to find money to start a retirement plan, a person with a modest income needs to make an up-front commitment to stop accruing debt and to reduce spending on such "wasteful" items as lattes and cigarettes. In the end The Automatic Millionaire does not offer much that is new for readers already familiar with personal finance basics like accelerated mortgage payments, "the miracle of compound interest," and the setting up of emergency funds. But, for those just starting with financial planning, Bach provides a host of resources to put recommendations into action. He walks his readers through such fundamentals as shopping for interest rates, creating a balanced retirement portfolio, and consolidating debt. And Bach's conversational style will make this quick read highly palatable for those daunted by more detailed investment and personal finance titles. --Patrick O'Kelley --This text refers to an out of print or unavailable edition of this title.
From Publishers Weekly
Bach, author of several bestsellers including Smart Women Finish Rich and Smart Couples Finish Rich, offers a simple prescriptive plan for financial security. The secret: the astonishingly vanilla "Pay Yourself First," which, in Bach's words, is "the one proven, easy way to get rich." Instead of worrying about taxes, budgeting or investing, the key, according to Bach, is to set aside between 10% and 15% of gross income for savings the equivalent of one hour's worth of income every day. While this strategy may seem obvious, many people don't take this basic step. That's why Bach says everyone should write down their "Automatic Millionaire Promise," which spells out what percentage of their income they will start saving by a certain date. To insure that people carry through on their efforts, Bach says they should have deposits automatically made to a retirement account. Then, the next step is to capitalize on the power of compounding by contributing the maximum amount to, say, an employer's 401(k) account. To help readers navigate the maze of investment choices, Bach includes contact information for a number of mutual funds and Web sites offering authoritative financial information. Bach's key principle, along with such advice as buying real estate, paying down debt and making charitable deductions, is not groundbreaking; and regrettably, it may be unrealistic for many: tens of millions of Americans are in serious credit card debt because they can't make ends meet on their salaries; how, then, are they to save so much of their gross income? However, his easygoing approach, complete with real-life examples and clever phrases such as "Latte Factor," will appeal to the many money-challenged consumers who have made a New Year's resolution to get their finances on a firmer footing.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
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Top Customer Reviews
I have been saving this way for decades "set it and forget it" - like the old infomercial used to say! I can retire in 2 years and look forward to a future of financial independence.
According to multiple sources, 6 out of 10 Americans don't have $500 in savings. This book is a powerful tool to help fix this crisis!!
This book had me thinking quite a bit about this concept I read all the time by conservative personal finance writers. The concept I am talking about is investing 10% of your gross income for the long-term and then in 30 years you'll be able to retire will a ton of money. I have even used examples of this showing that if you invested X amount of money you'll end up being a multi-millionaire in 30 years. Perhaps, I wasn't thinking completely clear when I talked about all the great results. The reason Bach had me thinking about this is because he kept talking about the average salary being a little less than $50,000 right now. Well 30 years ago, the average salary was $14,000. Now, your gross pay at $14,000 makes $816.00 a month, and your 10% investment would be $81.00 a month. If you invested $116.00 a month for 30 years at a return of 12% APY you would accumulate $320,000 which is hardly enough to retire on in 2010. Let's say for fun you made twice the average pay in 1980 and brought in $30,000. That would be ton of money in 1980 standards. If you invested 10% of your gross monthly income for 30 years you would accumulate just over $700,000. Nice chunk of change, but hardly enough to last through 15 years or more of retirement by 2010 standards.
Right now, having about $5 Million for retirement sounds awesome. But half a million also sounded good in 1980... I feel it is nearly a certainty that you must use other vehicles of investing if you want to cross that threshold between being who you are now and being wealthy. Grinding will not do it. So, where do we go to invest in addition to our 10% or possibly in place of it? Well I think the best option is to start using OPM. That means Other People's Money. The easy was to use OPM is with real estate. If you put in $20,000 as a down payment and land yourself a $200k property and then that property increases in value (while simultaneously producing cashflow) to $220k over the course of 2 years (not all that uncommon) you would realize a 50% return on your money but the property is growing at 5%. That sounds pretty awesome. Other ways to get access to OPM is to either start a business (pretty risky), or buy an existing business (sometimes time intensive and requires more work than real estate).
Okay... stepping of my soap box. The fact is that you need to do more with your money then just invest in your average stocks and bonds if you want to accumulate any kind of real wealth. Bach is a great writer and I love his books and his attention to real estate as a vehicle for wealth building. As always, if you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.