Book review: I will teach you to be rich by Ramit Sethi

I will teach you to be rich – Ramit Sethi

Synopsis:
As the title implies, this book is focused on teaching you to be rich. The book is focused on young people (in their 20s). A six week program is explained in detail on how to look at every aspect of your situation and improve it. From optimising your credit cards and bank accounts, to tracking your spending and simple investments. The book also looks at how you can negotiate to get a raise or even get a better deal on a house or car. The book uses plain English without any complicated formulas or number crunching.

What I gained from reading this book:
A more accurate title for this book would be ‘I will teach you to be in control with your money’ and if you follow the steps, you will be in control. This book can make you rich if you do follow the instructions. You won’t get rich tomorrow, or even in a years’ time, but eventually you will. Studies show that people who have a strong control over their income and spending become richer as time goes on. The great thing about this book is it is easy to implement.
This book was straight forward and very easy to read. My biggest gain from reading this book was seeing a fresh perspective on personal finance that I actually enjoyed. I had already implemented the steps that the author suggests, so although I didn’t learn anything new (I’ve read so many books on this subject), I did get much needed reinforcement that I am doing the right thing and one day it will pay off.

Positives:
This book is extremely easy to read and is enjoyable. Young people will relate to the author and his writing style. The advice given is practical and it works.

Negatives:
I thought that maybe it could go into more detail, but then readers would get bored and not implement the plan. So the fact that the book is short and basic is a good thing. The most important thing here is that the reader takes action, and I think the book will do a great job encouraging it.

Recommended for: All young people
Every young person (from teenage years onwards) should read this book. Even if you hate the word finance and don’t want to think about it, you should check it out. In forty years time you will be so glad you did.

Genre: Personal finance

Overall rating: 8 out of 10 stars

Australians can buy the book by clicking the picture below:

Where to from here:
If you want to go into more detail on the topics covered, I have reviewed many other books on personal finance that go into great depth. Click on ‘List of book reviews’ at the top of the page to see the ones I have reviewed.

If you have read this book, feel free to give it your own rating by posting a comment below.

Four books you must read before starting your own business

If you are thinking about starting your own business, the hardest part is probably the very start. There is a wealth of information out there on a wide range of topics that business owners must know. Rather than guessing where to start, I have made this list of books that will give you a basic starting point with essential principles and concepts. After you read these books, you will know what needs to be done next.

1. The E-Myth Revisited

This book is an essential starting point for anybody considering starting their own business. The author explains to Susie, somebody who has already started their business, why her results have not been what she expected. A wide range of topics are explained very well from lessons in franchising all the way to the mindset a business owner must have.
By the end of this book, you will have a much clearer idea of what you need to do, and more importantly, how you must think.



2. MBA in a day

For those who don’t want to spend 3+ years studying business at university, this book is a way to gain a basic understanding of the principles and concepts that would have been taught. By no way am I saying that this book compares with three years of study, but it does give a good summary of the topics. Everything from accounting and finance to marketing and strategy is discussed.
After reading this book you will have a very basic understanding of all the topics you will need to understand to successfully run a business. From there you can find more books or even short courses on the specific subjects you want to learn. It is important to be aware of what you need to learn and why you should learn it. This book does a good job in increasing your awareness in business subjects.



3. How to win friends and influence people

No matter what type of business you plan to start, you will be involved with people. Even if you are starting an internet only business, your customer service and networking skills will determine your success or failure. This book teaches essential people skills that everybody in business must recognize and apply. Ever walked out of a store disgusted by the lack of customer service and decided never to go back? Well if you don’t have first class people skills, there is the chance that people will react that way to your business.
This book will teach you everything from improving customer (or supplier) relationships to handling conflicts and arguments. Applying the principles in this book is an easy and effective way to improve your business’ reputation.


4. Getting to YES (Negotiating agreement without giving in)

Like this book states “like it or not, you are a negotiator”. Regardless of your business, eventually you will need to negotiate with somebody. How you handle that negotiation (and all future negotiations) will have a huge impact of your business’ performance. Whether you are hiring somebody and negotiating their pay and benefits, or negotiating with your suppliers, having an understanding of negotiating and how to effectively do it is essential. This book is most effective to protect you from people who will try to take advantage of you or use dirty tactics. The small cost of this book outweighs the raw deals and manipulation you could have encountered had you not read it.
This book will introduce you to what negotiating is and what it is not. Most people don’t really understand negotiating to begin with so reading this book will already put you at an advantage. With starting businesses, the more advantages you can get, the more likely you will be successful. Even if you think you are a good negotiator, you can always improve. Grasp hold of any advantage you can get your hands on. A solid understanding of negotiating is a clear advantage.



I have chosen these books because they are topics that many people would neglect or completely overlook. The main lesson is that the right frame of mind is essential for success. Topics such as accounting or marketing are easy to learn, so after you read these books you can continue to study them as you like. On the other hand, developing the mindset capable of running a successful company is so important, yet many people don’t even consider learning how to do it.

Book review: The little book that beats the market by Joel Greenblatt

The little book that beats the market – Joel Greenblatt

Synopsis:
This book explains an extremely simple strategy that the author suggests will beat the market return. The author starts by telling a story of a boy who sells packs of gum. The story explains in very simple terms, how to correctly value a business. From the first chapter onwards, the author uses very simple story-telling to explain finance concepts and principles. Each chapter adds to the previous ones and becomes more complex and detailed. All this storytelling is used to give the reader an understanding of why the author’s ‘Magic Formula’ works in beating the market.
The ‘Magic Formula’ is a very simple concept in finance but the author holds that it has beaten the market returns from the past 17 years and there is little reason why it will not continue to do so. Towards the end of the book the formula is explained in detail with enough information for the average investor to apply it. The appendix is full of detailed information on the formula.

What I gained from reading this book:
I picked up this book with great scepticism. My finance lecturers told me that people cannot consistently beat the market (the Efficient Market Hypothesis). I decided to give it a read. The way the book is written is very unusual for an investment book. The best way to describe it would be that it was written for a young teenager. No jargon or excessive words. The author doesn’t take himself too seriously by adding little jokes throughout the book. All in all it was an interesting read.
With the actual ‘Magic Formula’, the author does a fantastic job in convincing the reader that the strategy is solid and will continue to give fantastic results in the future. As this book was written in late 2005, we have the ability to see how it has performed since then. After some research I have found quite a few blogs and website where people report their results using the ‘magic formula’. Some people have had poor results as it underperformed while others have held that it has been outperforming the market. At the moment I am doing my own testing but I think it is still too soon to say whether it will continue to show impressive results or not. My instincts tell me this is another ‘too good to be true’, but on the other hand, I wouldn’t be surprised if it does consistently outperform the market because of the logic behind the strategy.
I will continue to study this method and will report back if I come to any conclusion.

Positives:
Well written and easy to understand whether you have a background in finance or not. Important explanations on value, price and earnings. Very convincing explanations and results.

Negatives:
May not continue to outperform the market in the future. Seems a bit too good to be true.
Recommended for: Investors
Anybody who is interested in investing in the share market should have a read of this book. Even if you don’t choose to invest by using the method in the book, the explanations on finance concepts are easy enough for a child to grasp.

Genre: Investments

Overall rating: 8 out of 10 stars


Australians can buy the book by clicking the picture below:


Where to from here:
More detailed books on investing that I recommend are:
The four pillars of investing – William Bernstein
Five key lessons from money managers – Scott Kays

If you have read this book, feel free to give it your own rating by posting a comment below. If you have invested following this method, please let me know how it has gone for you.

What books do you read?

Hi all,

I hope you have found my reviews useful. If you have any recommendations for educational books or have read one worth mentioning, please leave a comment here on the book and your rating. It would be great to see what books you read and find useful.

More reviews to come,

Aaron

Book review: Good to Great by Jim Collins

Good to Great: Why some companies make the jump… and others don’t – Jim Collins

Synopsis:
Jim Collins and his research team set out to answer the questions, “can a good company become a great company?” and “if they can, how?”. By studying countless articles, interview transcripts and data, the research team came up with a definition of a ‘great’ company. The team would study two companies that started off in similar situations with similar future prospects but in one point in time (what they call the transition point) one company skyrocketed while the other withered. The great company (the one that skyrocketed) is compared to the comparison company (the one that underperformed). The results are the basis of this book. The chapters explain concepts and principles that were consistent among all the great companies but lacking in the comparison companies.
Companies such as Wells Fargo, Gillette and Circuit City (among many others) are analysed throughout the chapters. The book concludes with a very insightful FAQ section and wealth of information in the appendices.

What I gained from reading this book:
I read this book expecting it to be very similar to The E-Myth. It turned out to be very different. I am still undecided if I like this book or not. While I could clearly see that much effort has gone into the research, I’m not too convinced on the value of the results. Some concepts seemed so obvious that it seemed a waste of time to read about them.
The main problem I had with this book is the way the concepts were explained. Phrases such as ‘Getting the right people on the bus’, ‘the hedgehog concept’, ‘the three circles’, ‘grasp the flywheel, not the doom loop’, ‘level 5 managers’ pretty much sum up the type of lingo used throughout the entire book. I was expecting straight forward explanations and was disappointed to find that most explanations followed the lines of ‘make sure you get the right people on the bus in the right seats and the wrong people off the bus’. While using metaphors continuously may work for some people, it sure didn’t work for me.
Most people could probably guess the principles and values the great companies have before even picking up the book. So I was not impressed when I came across the part where the author explains why the company that gave the executives lavish perks in expensive buildings underperformed the disciplined company that cut executive’s pay 75% when times became tough and ran the business in a dental sized suite.
Although I do feel that most of the findings could have been explained better on a single A4 sheet of paper, I did enjoy reading this book (only some parts). For example: hearing about Walgreens and how they crammed so many stores in a small area and why was very interesting.

Positives:
Provides insight into many great companies and their culture. Very thorough explanations on the principles and concepts. Plenty of information in the appendices.

Negatives:
Most concepts and principles are obvious before even reading the book. A lot of buzz words and metaphors are used that may distract rather than assist. The viability of the study and the results is questionable.

Recommended for: Small business owners
I recommend this book for small business owners to get a better understanding of the types of principles and values they should apply to their business. Although many of the principles are obvious and common sense, it always helps to read up about them to help you apply them.

Genre: Business

Overall rating: 6 out of 10 stars

Australians can buy the book by clicking the picture below:

Where to from here:
I recommend reading The E-Myth: Revisited instead of this book. Read my review to understand why.

If you have read this book, feel free to give it your own rating by posting a comment below.

Book review: Microeconomic theory (Concepts and connections) by Michael Wetzstein

Microeconomic theory: concepts and connections – Michael Wetzstein

Synopsis:
This book explains the principles of microeconomic theory. Starting from the basics in consumer preference and utility maximisation, it progressively covers more complicated topics all the way up to asymmetric information and externalities. Each chapter is ‘mapped’ out so you can see how the concepts connect to each other (hence the title). There are plenty of diagrams to graphically explain the concepts and there are plenty of tables and equations. The examples are very useful to see how the concepts are applied to situations.
Real life questions are asked throughout the chapters to show the connection between the theoretical concepts and real world use. The ‘application’ boxes provide insight to issues seen in the real world and use the concepts to explain how these issues are dealt with. For example: an application box explaining the minimum wage explains if you should be for it or oppose it.

What I gained from reading this book:
I think the best aspect in this book is the real life questions it answers. So many people don’t realise the potential use economics has in their daily life decisions. Each chapter answers specific important questions such as ‘How do we decrease our dependence on foreign oil?’, ‘Is allowing the poor to have affordable housing desirable?’, ‘Why have equal opportunity legislation?’, ‘Should you always play the lottery?’. The answers to these questions are very insightful and revealing. In addition to reading the answers, I learned how to answer similar questions on my own using economics. As you can see, economics is useful in a wide range of topics. The number one gain I made from this book was the ability to question everything I hear or see and find answers.

Positives:
Well set out and provides useful examples and studies. Provides a good connection between the concepts and real world application. A wide range of topics are dealt with in detail.

Negatives:
The book uses a lot of equations and mathematics to explain the concepts. If you don’t like maths, you won’t enjoy these explanations. Of course the book also explains the concepts through words and diagrams, so it isn’t just math.

Recommended for: People interested in economics
I recommend this book for people wanting to learn economics. Because it starts from the very basics and covers a wide range of topics, it is a good choice. On the other hand, people who always question the Government’s policies will benefit from studying economics because it will give you a good understanding of why those policies were created. Economics provides a way to analyse the choices we make and helps us better understand those choices.
Genre: Economics

Overall rating: 6 out of 10 stars

Australians can buy the book by clicking the picture below:

Where to from here:
If you decide you don’t want an in-depth book on economics and prefer to learn a general understanding of business as a whole, I recommend the following book:
MBA in a day by Steven Stralser

Alternatively, to read another book on economics, I recommend:

Freakonomics by Steven Levitt

Book review: The ultimate depression survival guide by Martin Weiss

The Ultimate Depression Survival Guide: Protect your savings, boost your income and grow wealthy even in the worst of times – Martin Weiss

Synopsis:
This book takes on two tasks: to analyse the current economic situation and see why a depression is likely to happen, and to give advice on how to protect your financial position if a depression does occur. The book starts by explaining why a depression is inevitable and explains why the government won’t be able to stop it from happening. In each chapter, step by step advice is given under topics such as “how to protect your job in bad times”, “How to go for profits in a down market”.

Many of the problems in the current financial system are identified and the author strongly makes his point that things will only get worse. Many comparisons are given between the First Great Depression from 1929 and the current situation to help explain why a Second Great Depression is inevitable. The author uses notes from his father to explain what it was like in the first depression.

What I gained from reading this book:
I read this book after seeing it on Amazon and the high average rating it received from the readers. To be completely honest, I was grossly disappointed by this book from cover to cover. My instincts were telling me the whole time that the author’s points were biased and not explained objectively. The author strongly emphasises that a severe depression worse than the ‘First Great Depression’ is inevitable. While he may have good reasons to say this, everybody knows that nothing in this world is 100% certain. To say that something is inevitable raises a red flag in my mind.

Another problem I had with this book was the advice given. Basically the author says to completely remove your money from real estate, stocks and even bank deposits and hold either cash or Treasury Bills. I was shocked at this advice. Then I remembered the title of the book “depression survival guide”. If a depression does occur, the people who follow this advice will be very glad they did. What the author fails to mention is that if a depression does not occur or if the global economy starts to recover (whatever the small chance), the people who followed this advice will deeply regret it.

I like to think of the advice as betting on a horse race. Imagine betting all your money on the horse named ‘Depression’. If ‘Depression’ wins the race, you win. If another horse wins, say ‘Recovery’ or even the least likely, ‘Expansion’, you lose big time. This book is betting that the economy will tank. Remember the saying not to have all your ‘eggs in one basket’? Well this book completely ignores that advice.

I also found myself frustrated with many parts in the book where the author would exaggerate problems by using bold or italic writing and using over the top adjectives. Phrases such as ‘financial war zone’, ‘crumbling economy’, or ‘jump from the frying pan into the fire’ really demonstrate the tone of the entire book. This style of writing felt very ‘snake oil salesperson’ to me and I am left feeling very sceptical. Everything seems to be either one extreme or another. For example, in the chapter entitled ‘How to escape the housing nightmare’, the headings use words such as: mania, corruption, fraud, cover-ups, deceptions, collapse! to tell you why you should sell. An objective discussion wouldn’t use such fear provoking words. The entire book is filled with over-the-top hyperbole that I can see will do nothing but instil fear in many people. Personally, this type of writing destroyed any confidence I had in the writer and his points.

When I finished the book, the first thing I thought to myself was that in ten years, either the author will be celebrated as a visionary, or he will be forgotten like so many other people yelling that ‘the sky is falling’. At the moment, many people are convinced that the author is right on the money.
So what did I gain from this book? I gained a basic understanding on how things have become the way they are now and an idea of what I could do if a depression does occur.

Positives:
Delivers what it promises: a clear guide to ‘survive in a depression’. Very insightful explanations on the current bailouts and how the economy has come to this situation. Provides good advice for those who are worried that they will not be able to survive a depression.

Negatives:
Assumes that a depression will happen and bases the advice solely on that prediction. Uses so much hyperbole it almost sounds like listening to a salesperson make a pitch. Does not explain the risks in the advice given and takes a very biased position throughout the book.

Recommended for: People who are worried about the possibility of a depression.
If you don’t think you would be able to financially survive a depression, this book gives you advice what to do.
If you are wondering why the situation is so bad and why it could get worse, the book provides in-depth explanations. Although I really disliked this book, I know that everybody needs to consider the possibility (not inevitability) of a depression.
Just remember, although I didn’t enjoy the book, many other people did, so feel free to read the reviews by people on Amazon to gain a different perspective.

Genre: Personal finance

Overall rating: 5 out of 10 stars



Australians can buy the book by clicking the picture below:


Where to from here:
I recommend the following book that gives fantastic advice on investing:
The four pillars of investing by William Bernstein

If you have read this book, feel free to leave a comment on your thoughts.