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The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich Paperback – December 27, 2005
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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
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!!
Start reading this book, it will allow you to start saving for your retirement, save money for emergency situations, Close your credit cards, pay your house loan faster and also give back.
David Bach has taken basic, proven investment and savings techniques, bound them together in one easy-to-read manual, and produced a book of financial truths and techniques for everyone.
The power of systematic investing is well-documented and proven; Bach calls it the "latte factor": the systematic investment of small amounts of money over time. His spin is to automate your highest financial priorities. If retirement is your top priority, for example, automate that choice by having funds invested into 401k's, IRA's, and other plans faithfully, without having to make a recurring, monthly decision. Human nature is such that if I have to repeatedly make a decision to set aside funds for a long-term goal, in the face of short term pressures and priorities, the long-term goal will eventually lose out. He is right.
As a "younger" boomer in his late forties, I take comfort in Bach's strategies; there is still time for them to work in my life. I have already executed many of them.
Warning: If you are already 60+, you might not have enough time before retirement to fully harvest the seeds Bach recommends planting. Seek other remedies to meet your retirement goals.
Most recent customer reviews
It will make a Hugh impart in anyone's life, at any age, at any income level.