Book notes – I Will Teach You To Be Rich

Book notes – I Will Teach You To Be Rich

I Will Teach You To Be Rich

Rating: 5/5

Book notes:

  • “When it comes to weight loss, 99.99 percent of us need to know only two things: Eat less and exercise more.” This is the case with all things in life. People get stuck in the minutiae, while a lot can be solved by obvious solutions.
  • The reason for this is that “People love to argue minor points, partially because they feel it absolves them from actually having to do anything.”
  • The paradox of choice: “with too much information, we do nothing.”
  • “A lot of your [financial] problems are caused by one person: you”
  • “The 85 Percent Solution: Getting started is more important than becoming an expert.”
  • “Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t.”
  • “I have met with thousands of millionaires in my years as a financial counselor[…]. They all lived on less than they made and spent only when they had cash.” Focus on the big wins if you want bigger results.
  • On rate chasing: “That’s a colossal waste of time for most of us, since a 0.5 percent difference equals just a few dollars per month more in interest. Plus, interest rates change over time, so rate chasing doesn’t even make sense. I plan on sticking with my bank for the next few decades, and I’m sure you have better things to do with your time. So focus on the big problems, not on rate jumping.”
  • “you need to optimize your checking and savings accounts. This means you shouldn’t be paying fees or minimums”, because “If your Big Bank charges you a $5 monthly fee, that basically wipes out any interest you earn.”
  • The way you phrase your questions matters: “As a customer, don’t make it easy for companies to say no.”
  • “If you’d invested ten years ago, wouldn’t it feel good to have a lot more money right now? Well, the next best time to invest is today.” This is generally applicable for everything you regret.
  • “more is lost from indecision than bad decisions.”
  • “Conscious Spending Plan. What if you could make sure you were saving and investing enough money each month, and then use the rest of your money guilt-free for whatever you want? Well, you can—with some work. The only catch is that you have to plan where you want your money to go ahead of time (even if it’s on the back of a napkin). Would it be worth taking a couple of hours to get set up so you can spend on the things you love? It will automate your savings and investing, and make your spending decisions crystal clear.”
  • Frugal is not the same as cheap: “Frugality, quite simply, is about choosing the things you love enough to spend extravagantly on—and then cutting costs mercilessly on the things you don’t love.”
  • “A Conscious Spending Plan involves four major buckets where your money will go: Fixed Costs, Investments, Savings, and Guilt-free Spending Money.”
  • “You save money so that you can spend it later on the things that make you happy. You don’t save money just to watch your account balance grow.”
  • “Habits don’t change overnight, and if they do, chances are it won’t be sustainable.” so: “try making the smallest change today.”
  • “the minute [a] system becomes too oppressive for you to use is the minute you stop using it.”
  • Building systems means you follow an effort curve: “The Curve of Doing More Before Doing Less”.
  • The myth of expertise: Experts weren’t able to distinguish two glasses of the same red wine, but even “more damning, the wines were actually both white wine—the “red wine” had been colored with food coloring”! “Expertise is about results”.
  • “But over the long term, the overall stock market has consistently returned about 8 percent.”
  • investors should “be fearful when others are greedy and greedy when others are fearful.” – Warren Buffet
  • Investing guidelines: “more than 90 percent of your portfolio’s volatility is a result of your asset allocation” and “Your investment plan is more important than your actual investments.”
  • “if you’re twenty-five and just starting out, your biggest danger isn’t having a portfolio that’s too risky. It’s being lazy and overwhelmed and not doing any investing at all”
  • “YOU CANNOT JUST PICK RANDOM FUNDS AND EXPECT TO HAVE A BALANCED ASSET ALLOCATION”
  • “Remember, if your goal is less than five years away, you should set up a savings goal in your savings account.”
  • An “emergency fund should contain six months of spending money.”
  • Being rich is about freedom.
  • When giving advice: “it’s not about criticizing or noting things that are being done wrong—it’s about figuring out ways to help each other so you can grow together.”
  • “Your starting salary is even more important than you think because it sets the bar for future raises and, in all likelihood, your starting salary at future jobs. “
  • Tips for asking for a raise:
    – HIGHLIGHT THE WAYS YOU’LL HELP YOUR COMPANY HIT ITS GOALS.
    – Avoid a yes or no, avoid mentioning numbers: “Let’s find a way to arrive at a fair number that works for both of us.”
    – Have another job offer
    – Come prepared
    – Practice negotiating with multiple friends.
  • “WHEN IT COMES TO SAVING MONEY, BIG PURCHASES ARE YOUR CHANCE”
  • When buying a car:
    – Pick a reliable car, maintain it well, and drive it for as long as humanly possible
    – ASSUME YOU HAVE TO BUY A USED CAR
    – Buy a car at the end of the year (sales targets)
    – Maintain your car
  • When buying a house:
    – THE BOTTOM LINE: BUY ONLY IF YOU’RE PLANNING TO LIVE IN THE SAME PLACE FOR TEN YEARS OR MORE.
    – Think of it as a purchase, not an investment: since the return on residential real estate was just about zero after inflation.

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