Millennials Can Get Rich Slowly – If You Can
Avid readers of this site might already know one of my favourite financial books is The Investor’s Manifesto by William Bernstein. Bernstein is a best selling financial author and was a practicing neurologist. Needless to say he is very bright and his books are witty and fun to read, yes, a financial book can be fun to read. Recently, Bernstein released a short ebook entitled If You Can: How Millennials Can Get Rich Slowly.
You can buy it using that link or you should be able to download it still for FREE – here.
If You Can was targeted to Millennials providing a trusted recipe for financial freedom; information I wish I read about 20 years ago when I was a trying to figure out the investing universe. Here are my favourite takeaways from If You Can and what Millennials can learn from this bargain book about the five bad things – hurdles as Bernstein puts – that you must overcome if you are to retire successfully.
Hurdle One – You Need to Spend Less and Save More
Bernstein suggests if you want to retire at age 65, starting at age 25, you’ll need to save at least 15% of your income. Young investors would also be wise to kill credit card debt and student loans in that order, before investing writes Bernstein. As part of your financial education, he also recommends you read the famed-book The Millionaire Next Door.
Hurdle Two – You Need an Adequate Understanding of Finance
In this chapter, Bernstein suggests would-be investors take some time to learn about stocks and bonds and the risks associated with owning each asset. On the subject of timing the market and applauding anyone who can, Bernstein wrote: “Say you could time the market or successfully pick stocks. Would you be publishing a newsletter, telling people about your predictions on TV, running a mutual fund, or, ha ha, working as a stock broker? Of course not. You’d borrow as much money as you could, bet on your predictions with that borrowed money, and go to the beach.” To continue your financial education, Bernstein recommends you read another famous investing book Common Sense on Mutual Funds.
Hurdle Three – You Need to Learn the Basics of Market History
“By now you know enough investment theory to understand this paradox: since risk and return are inextricably intertwined, high risk and high returns go hand in hand, and so do low risk and low returns.” Bernstein goes on to share the secret of successful investing over time, buying assets when others are selling them. “Finance, though, for the reasons explained above, is the exact opposite; when all your friends are enthusiastic about stocks (or real estate, or any other investment), perhaps you shouldn’t be, and when they respond negatively to your investment strategy, that’s likely a good sign.”
Hurdle Four – Overcome the Enemy in the Mirror
“Long-term planning, of course, is what investing is all about, and it’s a predisposition that our maker most definitely did not endow us with.” Bernstein’s academia and work as a neurologist provides some great insight into the most important chapter of the book for any investor. To help you wrestle with your worst financial enemy (you), Bernstein recommends reading Your Money Your Brain by Jason Zweig.
Hurdle Five – You Need to Watch Out for the Monsters within the Financial Industry
Although I’m not a Millennial this was my favourite chapter, especially because I enjoyed this Bernstein recommendation: “In fact, the prudent investor treats almost the entirety of the financial industry landscape as an urban-combat zone. To be avoided at all costs are: any stock broker or “full-service” brokerage firm; any newsletter; any advisor who purchases individual securities; any hedge fund. Most mutual fund companies spew more toxic waste into the investment environment than a third-world refinery.” Ouch! He’s got a great point though. Investors must be wary of the financial industry because the industry is very much designed to profit from you and me. This didn’t dawn on me until my late-20s and young investors who read If You Can can get a much deserved head-start on this very subject.
Open and keep a free copy of If You Can here. Your bright financial future depends on it. Thanks for reading.
I’ve worked hard to jump each one of these hurdles (and stay on the proper side). The toughest part for me was overcoming my silly fears – everything else has been easy.
This all is so important for Millennials to understand. Heck, Warren Buffett began investing at age 11 and regrets not beginning sooner!
Fears are pretty close to investing behaviour, a very tough hurdle. The fact you are aware of it is key. Thanks for the comment Will and good luck on your journey.
I differently agree with those five hurdles for the most part. Learning about basic money and finance should be apart of every adults life, and knowing not to spend as much as or more than you make ought to be a no-brainer! Being in my mid-20s and working in retail it is quite shocking, although I suppose not overly surprising on the lack of knowledge that a lot of people near my age, both younger and older just seem to not have at all. They talk about needing more money, yet many of them have smart phones, data plans, go out to eat a lot and buy new clothes every season.
For hurdle 5, I’d have to agree that many advisers etc will probably not lead you to the best option for your situation, but to a ‘good’ option when compared to what an knowledgeable investor may do for themselves, like put all their money into cash deposits/GIC’s which gives back less than inflation at the moment. A mutual fund may not be preferable to an ETF, but currently, and certainly in the past few years they’ve had better returns by far than GIC’s.
Regarding hurdle 5, I think there are some great FAs out there, they just happen to be in the minority.
I think investors need to be cautious of the financial industry in general. I didn’t always think this way but I certainly do now.
If you’re in your mid-20s, now is the time to get educated. Making some smart decisions now and you could be financially free in your 50s, which is a pretty darn nice place to be. Thanks for the comment!
There definitely must be, and hopefully within the next year or two i’ll be one of them! 🙂 Currently half way through the CSC and I want to do more certifications in the direction in the future.
Retired by 50 is certainly something I would like to do, I certainly prefer having fun and enjoying myself in my hobbies than working!
Congrats on doing the CSC…nice work! Keep me posted on the progress and good luck.
We haven’t invested our money because we are too nervous to and do not know exactly the risks. I would love to hear good books to read about this.
This is a great book, well worth the read, since the psychology of learning how to invest is far more important before diving into investing products or choices. Thoughts on that? Have you read other articles on my site about just starting out? Let me know and I can send you some.
Thanks for this summary. I will buy the book. It sounds like a ‘must read’ even though I am no longer a millennial.
For about $1, it’s a great deal!
William Bernstein has written some difficult to read books but also some easier ones and I’ve just read his ‘Rational Expectations’ which I would also recommend. He makes some investing decisions unnecessarily obtuse such as he doesn’t like bond etfs and prefers DFA funds with the latter unavailable to most except through special advisors. However, he makes asset allocation easier to understand particularly the difficult bond/equity mix question which he elegantly personalizes by considering three most important factors: tolerance of risk, capacity for risk, and need for risk. Most advisors just focus on the first, but Bernstein puts particular emphasis on the latter two which I like!
I’d say hurdle #1 is likely the biggest to overcome. Many young people today spend more than they earn and have nothing left to save. its one thing to have a solid understanding of investing but with no steady savings to accumulate over time, it’s almost pointless.
True enough Dan, you can’t invest what you don’t save 🙂
Interesting. I think that if people endeavour to make themselves a student of personal finance and investing at a young age, these aren’t hurdles at all. I will have to give this book a read.
I think this book is excellent value, I mean, it’s only a buck!
Thanks for sharing your summation of Bernstein’s “If You Can.” I read the booklet a few weeks back and thought it was an excellent intro to personal finance and investing. I particularly enjoyed his section on investor psychology and, of course, his thrashing of the financial industry! This is a perfect little book for summer reading.
Thanks for sharing your comments on the book and agreed, the investor psychology part was a very good read!
Hi. I read The Investor’s Manifesto a few years a go and loved it. I thought Bernstein did an excellent job conveying the power of index investing if you’re not willing to put in the effort for picking individual companies to invest in. I’m a the front end of the Millennial group and have a few friends who are truly their own worst enemy when it comes to investing. More than a few are trying to use options as a get rich quick scheme. Some “bets” have worked but most have failed. There’s no science behind their choices, just hope of hitting it big. I’ll have to get Your Money Your Brain and give it a read and then leave a copy at their place by “accident”. Thanks for the review!
I just entered my 40s recently and would have loved to read such a book in my teens or early 20s, to set my investing course earlier than later.
I used to invest in penny stocks. That’s didn’t work out so well. I now only invest in companies that pay dividends and a few broad market ETFs. Investing in much easier this way!
Glad you enjoyed the review and hope to see you on the site more Thomas.
Interesting… the last hurdle is what caught my eye aside from learning about finance and money. I rely on an advisor but for those that don’t understand how to invest on their own, are too nervous or don’t care to they are at the mercy of these people.
Nothing wrong with using an advisor, as long as they are adding value.