I’ve been putting off reading Automatic Millionaire by David Bach, mainly because I wouldn’t have gotten it unless it was free since it struck me as a pretty simplified investment book. I wasn’t wrong. It’s pretty fluffy. That isn’t to say it’s not right for anyone, I just don’t think I was the target audience.
The basic premise is as I predicted: Pay yourself first (say, 10%), automatically. Do this via automatic payroll deductions for 401ks, IRAs, or regular taxable savings account, before you even get your paycheck. The idea is that you won’t be able to spend what you don’t get, and it’s too much trouble (or you’re too lazy) to write a check or make a transfer every month to a savings account. Okay. Fine. This is probably true for many people. So how is this book 200+ pages long?
The rest of the book applies the “Make it Automatic(tm)” mantra to building your emergency funds account, home ownership, paying down credit card debt, even charity. Mr. Bach also writes pretty smoothly, and has a very energetic and motiviational writing style. I suspect this is the reason why he sells so many books.
Also, there is a sprinkling of pretty simply investment data and information. For example, if you saved $5 a day, or $150 a month, every month, for 40 years and assume a (generous) 10% annual return, you’ll have almost a million bucks ($948,611 to be exact). It also has some very general suggestions about asset allocation. Don’t get this book for investment specifics!
I do like that the book is modern in that it refers readers to many different companies and websites that can actually help them accomplish these goals, such as Capital One 360, Ameritrade, TD Waterhouse (also Ameritrade now), Vanguard, and ShareBuilder.
Overall, this book is a mix of Richest Man in Babylon (due it’s save 10% of your money first before doing anything else) and Rich Dad, Poor Dad (inspirational words). If you don’t have an IRA, or don’t have a 401k, read this book. Otherwise, read this book – in Barnes or Borders as Jim suggests in his review.
By Jonathan Ping | Book Reviews | 7/7/05, 10:00am