Author: Andrew Hallam
Published year: 2011
Genres: Investment
Status: Done
The Book in 3 Sentences
Spend like a millionaire - be frugal
Build a complete balanced portfolio with stock and bond index funds ( With low-cost index fund, you’ll beat the majority of pros).
Top Quotes
Regardless of how high people’s salaries are, if they can’t live well without their job, then they aren’t truly rich.
“Setting aside” money for a child, however, is very different from encouraging a child to earn, save, and invest.
You should buy a business that any idiot can run, because one day an idiot will be running it. (By Peter Lynch)
Summary & Reflection
The author is a frugal and disciplined guy, his idea should be largely influenced by Millionaire next door but much more practical today.
Creating a discipline plan to rebalance a portfolio removes the guesswork from investing, and it forces investors to ignore their hearts.
Add money to their investments every month. They rebalance once a year.
Split money evenly between a U.S. stock market index, a Canadian stock market index, and a bond market index. At the end of the calendar year, simply rebalance the portfolio back to the original allocation. If the U.S. stock market index did better than the Canadian index, then sell some of the U.S. index to even things out with the Canadian index. If the bond index beat both stock indexes, then some of the bond index would be sold to buy some of the Canadian and U.S. stock market indexes. Of course, if you’re making monthly contributions to the account, you could rebalance monthly by simply buying the laggard—to keep your allocation evenly split three ways.
If you can’t resist to pick individual stocks, keep them only 10% of your portfolio, the rest should be index funds and bonds.
Buy business that increase the price of products they sell
Consider the business that are easy to run and make sure their products are going to rise prices with the inflation. The anti examples are tech companies which end up selling computers cheaper and cheaper. Good examples are coca cola, Johnson Johnson, no pressure to come up with the next great product.