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Reconsidering the Advice in 3 Popular Personal Finance Books

Popular Personal Finance Books are Inspirational

Most of the popular finance books lack substantive advice on investing. They are inspirational & their core message is a good one: You are ultimately responsible for your own financial success.

But a smart reader will have to go elsewhere for an in-depth discussion of how to set up a portfolio & choose among stocks, bonds, exchange-traded funds or mutual funds.

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Reconsidering the Advice in 3 Popular Personal Finance Books

Reconsidering the Advice in 3 Popular Personal Finance Books

https://www.nytimes.com/2019/10/11/business/suze-orman-robert-kiyosaki-dave-ramsey-books.html

nytimes.com

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Key Ideas

Popular Personal Finance Books are Inspirational

Most of the popular finance books lack substantive advice on investing. They are inspirational & their core message is a good one: You are ultimately responsible for your own financial success.

But a smart reader will have to go elsewhere for an in-depth discussion of how to set up a portfolio & choose among stocks, bonds, exchange-traded funds or mutual funds.

Rich Dad's Most Unconventional Idea

R. Kiyosaki's "Rich dad, Poor Dad" reads like a novel. The most shocking message of the book:

Don’t focus on your job or career. Think primarily about building personal wealth.

Rich Dad's Questionable Financial Advice

“With low interest rates, and an uncertain stock market, the old adages of saving and investing for the long term make no sense.”

It is what Kiyosaki recommends in his famous book, but saving and investing for the long term are exactly what most experts say you should do.

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Take Action

Get to working on improving your finances today, not tomorrow. Reading the steps and thinking you’re capable of doing it but postponing it is just an excuse, an unprofitable one.

Communicate With Your Partner

Talking about your financial goals, and scheduling time once a month to go over your finances together can prevent money from affecting your relationship.

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Financial Literacy
Financial Literacy

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In And Out

Most of us know how much we make, but we need to pay close attention to how much money is actually coming in post-tax, and how much is going out.

You can start by writing down your Starbucks, Uber, Amazon, and take-out expenses, along with your car insurance, utility bills, subscriptions and memberships. Slowly we can realize that many of these small expenses add up to huge figures.

Review And Analyse

By noting down all your expenses on pen and paper, or on the PC excel sheet, you can start to review and analyse your spendings on a weekly or monthly basis. This will make you find innovative ways to save money, catching hold of ‘runaway spending’ that went unnoticed before.

Example: You could find that the $5 Smoothie that you had every day, could cost much less if you made it at home.

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The Cashsflow Quadrant
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The Cashflow Quadrant is a concept from Robert Kiyosaki's "Rich Dad Poor Dad" which represents the different methods by which income is generated:

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Active vs Passive Income

There are 2 types of income:

Active Income: You are trading time for money. In order to make money you must perform something. Every day you start from zero.

Passive Income: You do not have to be present to generate income. Things like real estate, stocks, bonds are sources of passive income. You are literally making money while sleeping.