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Financial Jiu-Jitsu: A Fighter's Guide to Conquering Your Finances Hardcover – October 26, 2010
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The Amazon Book Review
Author interviews, book reviews, editors picks, and more. Read it now
From the Inside Flap
Trading either commodities or foreign currencies might sound exciting. But if you haven't mastered even the basics of money managementestablishing an emergency fund, maintaining a budget, and setting money aside for your children's education and your retirementcan you honestly say you're on the path to perfecting the art of personal finance?
In Financial Jiu-Jitsu: A Fighter's Guide to Conquering Your Finances, financial advisor and Jiu-Jitsu enthusiast Scott Ford shows how mastering your financeslike mastering a martial arthas nothing to do with perfecting thousands of exotic, technically challenging moves. Rather, mastery is as simple as performing a handful of basic moves thousands of times. These basic financial moves include:
- Prepare to Win: Paying yourself first, maintaining a cash safety net, managing credit wisely, and never procrastinating
- Balance and Base: Determining your specific financial goals, and developing a vision for your life
- Closing the Gap: Overcoming your fear of the unknown by creating a personal balance sheet and using it to analyze your current financial situation
- The Power of Respect: Choosing and working with a financial advisor
- Timing: Taking advantage of tax-deferred investments, maxing out 401(k) contributions, and contributing to IRAs
- Gain Control: The basics of an estate plan, living trust, pourover will, and power of attorney
- Position Before Submission: Protecting yourself with insurance
- Attitude: Planning for your retirement
Learning Jiu-Jitsu taught Scott Ford to face both personal and professional challenges head onto anticipate problems, to be open to new ideas, and to seize opportunities. Now, in Financial Jiu-Jitsu, he teaches you how to use the guiding principles of finance to build a solid financial foundation that can then be leveraged to help you achieve your long-term financial goals, while building lasting wealth for you and your family.
You can't plan for everything life and the economy might throw at you. But after reading Financial Jiu-Jitsu, you'll be prepared for almost anything.
From the Back Cover
What is mind over market?
The financial market is like an adversary that's bigger, faster, and stronger than you as an individual investor could ever hope to be. Financial Jiu-Jitsu: A Fighter's Guide to Conquering Your Finances evens the playing field, showing you how to be a smarter fighter in the battle for financial freedom.
From year to year and even minute to minute, financial markets change, sometimes dramatically. The average investor grapples with this fact in one of two ways: fear everything and do nothing, or get emotionally caught up in Wall Street's every move, reacting impulsively and irrationally to each up or down. There's a third option. And if it's your hope to achieve a firm financial footing, it's your only optionmaster the guiding principles of finance to achieve mind over market, expertly and effortlessly adapting to and overcoming market swings. Financial Jiu-Jitsu shows you how to master the basic principles of finance to:
- Overcome fear
- Set aside emotions
- Build a financial foundation that can be leveraged to build real wealth regardless of what the market throws at you
Everyone's fighting a battle for financial freedom. Most are losing. Financial Jiu-Jitsu shows you how to win.
Top customer reviews
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It covers all of the main areas of personal finance adequately, and makes analogies from the world of martial arts. Now, personally, to me that is an odd place to source analogies for investing. I remember being in a meeting when I was a corporate bond manager, and the new head of credit research said to the credit analysts, "Credit analysis is war by another name." I rolled my eyes, and said to myself, "Oh, please, this is a business, and no more than a business. Don't make my analysts non-economically aggressive."
This book is long on structuring your finances, and short on how one invests, as is common for most personal finance books. The advice is simple and practical, and will benefit most individuals/families.
One of the many places where I agree with him is that you don't have to have a budget. Save first, and then survive on the remaining cash flow. This is an excellent way of managing finances, but it takes discipline. Not everyone can do this because they lack discipline on a month-to-month basis. Those that don't have that discipline should craft a budget.
I also found his approach to financial goals useful, because it asks the deeper questions on what the ultimate reasons for living are: not only ways in which we want to be served, but ways in which we want to serve. Figure out the broad goals for life first, then figure out the financial means to serve those ends.
He also takes a conservative approach to how much money one needs in retirement, using a 4% withdrawal assumption, which in a low interest-rate and mid-to-high P/E environment like today is only reasonable.
It was a breezy read for me, getting through the 180 pages in 90 minutes or so. Part of that is that it is a very familiar topic to me, but I suspect more of it is good structuring and chapter ends that repeat the main points in summary form, so that the main ideas are difficult to miss.
Everything important gets covered here for the life of an average person/family. The reader faces the challenge of executing on the good advice, or finding a good adviser to guide him.
Though I was a wrestler in high school, I sometimes found the analogies to martial arts to be strained. More importantly, I had a hard time following the logic in the appendix regarding investment performance. I am no fan of Modern Portfolio Theory, but MPT does not require the concept of buy and hold. Buy and hold stems from the idea that equities outperform equities and fixed income by a wide margin (the "equity premium"), so one can always win by holding onto equities, and not ever switching into safer asset classes.
The author's concept of capital preservation investing does not get adequately defined. Indeed, that could be a book in itself. The idea that there are seasons to take more risk and seasons to take less risk is obvious in hindsight, but implementing that idea is tough, and the author leaves us with not enough to do it. That should not be too much of a surprise though, because if there were an easy solution here, we all would have adopted it years ago, and I would be opining to you from a life of leisure, rather than that of a working stiff.
As such, I don't penalize the author too much, no one has the holy grail of market timing nailed down yet.
Who would benefit from this book: This is a basic book, and most suited for those that need to get their lives in order. Personally, I suspect younger males would find the analogies between investing and martial arts most appealing. I should try it out on my son who wants to be a police officer.
Like most books of this genre, Ford covers the basics of personal financial planning. You learn his version of success in the form of nine basic principles. In addition, there's an excellent and objective chapter on hiring a financial advisor. He discusses the different types of advisors, the most common professional designations, how advisors get paid, how to choose an advisor and what questions to ask them during the interview process. All good stuff.
There are a few parts of this book that stood out to me.
1. The "sugar." I enjoyed learning about Ji-Jitsu and how its principles can be applied to financial planning...and life itself.
2. The emphasis on "True Wealth." Ford defines True Wealth as, "all the things money can't buy and death can't take away. Yes, he wants you to succeed financially but he also wants you to succeed personally.
3. The "Family Benchmark." Rather than focus on trying to beat a benchmark like the S&P 500, Ford advocates determining your "Family Benchmark," which, "is the rate of return you need to achieve to reach your goals." He describes how focusing on this "benchmark" makes it easier to adapt to changing market environments.
4. Expecting the unexpected. Quoting one of his Ji-Jitsu instructors, Ford said, "on the mat, the unexpected is simply not possible because you should always expect anything to happen; if everything is expected then by definition nothing can be unexpected." He uses that to support the idea that you can't control the markets but you can control how you plan and respond to them.
5. "Position before submission." Sounds like a phrase you wouldn't use around children but it actually make sense as described by Ford. Basically, master the fundamentals before you try and get fancy with your money.
What would make the book better? Ford packed a lot of material on a variety of subjects into a compact 182 pages. I would have enjoyed a little deeper treatment on some of the topics. For example, his chapter on retirement planning was less than 10 pages. As a broad overview of many different topics, the book succeeds. Perhaps we'll see more books from him that take a more focused approach on some of the topics he addresses in this one.
Finally, Ford writes in a conversational tone that keeps you engaged. And he doesn't hold back his opinion. For example, he said, "the idea of retirement is a crock." He said, "I think of life as a series of stages. My goal is to someday build up sufficient assets so that I can make different choices about how I live my life." Further, "Why should your goal be to suddenly stop: Stop working, stop dreaming, stop achieving,...stop living your life to the fullest." Amen!
I especially like the "true wealth" section. My idea of wealth is different from everyone else, so my goals should be different from everyone else. Just like no two fighters approach a fight the same way, the book lets you use common sense to guide you on the path you want to follow. Easy to read, easy to follow, and entertaining. And you get to hear from Renzo Gracie too. Can't ask for more.