# O Livro em Poucas Frases O livro **“Eu Te Ensinarei a Ser Rico”** de [[Ramit Sethi]] é um guia prático e direto para ajudar as pessoas a gerenciar suas finanças pessoais. O livro é dividido em seis semanas, com cada semana introduzindo o leitor a um tópico específico e, ao final do capítulo, fornecendo ações práticas para o leitor seguir. O livro é escrito em linguagem simples e direta (às vezes mais do que o necessário), o que facilita a compreensão do conteúdo que o autor deseja transmitir. Uma das diferenças entre este livro e outros livros financeiros é que ele não entra em grandes detalhes sobre os ativos financeiros existentes, mas mostra como projetar sua própria versão do que é uma vida rica e como alcançá-la em poucos passos. **Importante:** Devo enfatizar aqui que o livro é escrito com base nos sistemas financeiros americano e britânico, por isso é importante avaliar cuidadosamente o que se aplica ao cenário brasileiro. No entanto, muitas das ações apresentadas no livro podem ser facilmente transpostas para o Brasil. # Como Este Livro Me Mudou Comecei a ler este livro depois de assistir à série de [[Ramit Sethi]] na Netflix. Embora eu já aplique grande parte do livro no meu dia a dia, foi interessante repensar meus [[Gasto consciente]]. Infelizmente, o livro é muito focado nos mercados financeiros americano e britânico, então alguns produtos e regras que existem nesses países não existem no Brasil. De qualquer forma, a estrutura principal do livro é bastante funcional e pode ser aplicada aqui (como venho fazendo há algum tempo). Acho que o que mais tirei deste livro foi o fato de que ele se mostrou uma boa oportunidade para revisar meus gastos e investimentos para que eu possa projetar minha vida rica de uma maneira melhor. # Notes - [[Dois tipos de pessoa em relação ao dinheiro]] - [[Como ficar rico de forma fácil]] - [[Paralisia de decisão]] - [[Solução de 85%]] - [[Relatório de crédito]] - [[Pontuação de crédito]] - [[Taxa de utilização de crédito]] - [[Sua conta é a base do seu sistema financeiro]] - [[Como escolher um banco]] - [[Sem investir você perde dinheiro]] - [[Considere investir em você mesmo]] - [[Decida o seu valor para as coisas]] - [[Gasto consciente]] - [[Hábitos não mudam rapidamente]] - [[3 estratégias para ganhar mais]] - [[Expertise é sobre os resultados]] - [[Viés de sobrevivência]] - [[Aposentadoria antecipada mais independência financeira]] - [[Alocação de ativos]] # Meus 3 Destaques Favoritos - O medo não é desculpa para não fazer nada com o seu dinheiro. - O fator mais importante para ficar rico é começar, não ser a pessoa mais inteligente da sala. - Concentre-se nas Grandes Vitórias para obter os grandes resultados. # Destaques (296) ## An Open Letter to New Readers (10) - As you’ll see in this book, I do things differently to typical money “experts”. I won’t lecture you about cutting back on lattes (buy as many as you want). I won’t try to convince you to keep a budget (I have a better method). (Capítulo: An Open Letter to New Readers | Página: 18) - Lets see if this is holds up (Capítulo: An Open Letter to New Readers | Página: 18) - I made three mistakes when writing the first edition of this book. (Capítulo: An Open Letter to New Readers | Página: 19) - My first mistake was that I didn’t cover the emotions around money. (Capítulo: An Open Letter to New Readers | Página: 20) - but if you don’t tackle your invisible money scripts, none of it matters. (Capítulo: An Open Letter to New Readers | Página: 20) - Invisible scripts are the messages you’ve absorbed from your parents and society that guide your decisions for decades– and often without even being aware of it. (Capítulo: An Open Letter to New Readers | Página: 20) - The second mistake I made was being too overbearing. The truth is, you can choose what your Rich Life is and how you get there. (Capítulo: An Open Letter to New Readers | Página: 20) - Writing the actual interest rates of banks in the original US edition of this book. (Capítulo: An Open Letter to New Readers | Página: 21) - Giving number without telling that things change (Capítulo: An Open Letter to New Readers | Página: 21) - Many people want “new” advice, but the value in this book doesn’t come from novelty– it comes from usefulness. (Capítulo: An Open Letter to New Readers | Página: 23) ## INTRODUCTION: Would You Rather Be Sexy or Rich? (33) - The point is that we love to debate minutiae. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 25) - Most of us fall into one of two camps regarding our money: we either ignore it and feel guilty, or we obsess over financial details by arguing interest rates and geopolitical risks without taking action. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 26) - We need to set up accounts at solid banks, automate our day- to- day money management (including bills, savings and, if applicable, paying off debts). We need to know about a few things to invest in and then we need to let our money grow for thirty years. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 26) - I decided to learn about money by taking small steps to manage my own spending. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 27) - Look at the actual data and you’ll see that an abundance of information can lead to decision paralysis, which is a fancy way of saying that with too much information, we do nothing. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 28) - Yes, the best time to start investing was ten years ago. The second best time is today. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 29) - We know that, because reading yet another frugality article is not going to change anyone’s behaviour. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 30) - I’ve found it’s a lot more fun to be the captain of my own ship, even if I go off course sometimes. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 32) - “I can’t save any money. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 32) - This part has a fundamental problem in my view. There ais the individual and the community. Channging theconditions of one might be true. But to change the conditions of a whole cmunity is way harder. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 32) - “The world is against me.” (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 33) - Now the author cgot to a different point. Whining and doing nothing is one thung. But point out how life might be way herder for some people than for others is just stating the obvious. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 33) - “Our education system doesn’t teach this.” (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 34) - As far as I know it it true in Brazil. Which is not the same thing as sayunf that they do not teach the basic knowledge that you need to understand personal finance and to seek information fo yourself. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 34) - Fear is no excuse to do nothing with your money. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 34) - Follow my CEO Method: Cut costs, Earn more, and Optimise your existing spending. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 35) - Remember: in relationships and work, we want to be better than average. In investing, average is great. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 35) - Sometimes even in those fileds. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 35) - The single most important factor to getting rich is getting started, not being the smartest person in the room. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 36) - Frankly, your goal probably isn’t to become a financial expert. It’s to live your life and let money serve you. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 37) - “What do I want to do with my life– and how can I use money to do it?” (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 37) - I’ll keep it simple. Too many books try to cover everything about money, leaving you holding a book that you “should” read but don’t because it’s overwhelming. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 37) - The 85% solution: getting started is more important than becoming an expert. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 37) - It’s okay to make mistakes. It’s better to make them now, with a little bit of money, so that when you have more you’ll know what to avoid. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 38) - Spend extravagantly on the things you love and cut costs mercilessly on the things you don’t. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 38) - My friend Jim once called to tell me that he’d gotten a raise at work. On the same day, he moved into a smaller apartment. Why? Because he doesn’t care very much about where he lives, but he loves spending money on camping and biking. That’s called conscious spending. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 38) - But investment isn’t about being sexy– it’s about making money, and when you look at investment literature, buy- and- hold investing wins in the long term, every time. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 39) - Don’t live in the spreadsheet. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 39) - I Will Teach You to Be Rich is about using money to design your Rich Life. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 40) - Every December, I sit down with my wife and we make plans for the next year. Where do we want to travel? Who do we want to invite with us? What can we imagine doing next year that we’ll remember for the next fifty years? This planning process– where we get to intentionally design our Rich Lives– is one of the most fun things we do together as a couple. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 41) - Most people think that investing means “buying stocks”, as if they should buy and sell random stocks and somehow magically make a profit. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 44) - In reality, their fundamental assumption is incorrect. Investing isn’t about picking stocks. (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 44) - Simple, long- term investing works. This idea gets nothing but yawns and eye rolls. But you decide: do you want to sit around impressing others with your sexy vocabulary, or do you want to join me on my gold- lined throne as we’re fed grapes and fanned with palm fronds? (Capítulo: INTRODUCTION: Would You Rather Be Sexy or Rich? | Página: 44) ## CHAPTER 1: Optimise Your Credit Cards (51) - have a fresh perspective. It’s not worth negotiating everything, but there are a few areas of life where negotiation is a Big Win. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 50) - The media thrives on creating fear and anxiety around debt, as if it’s inescapable and crippling. And they rarely suggest solutions– when they do, they’re along the lines of “eat out less”. Thanks, guys. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 51) - Most of all, we do nothing. This is how “outrage culture” works– it makes you feel angry and exhausted … and then you go back to doing nothing. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 51) - The truth about credit cards lies somewhere between these two extremes. As long as you manage them well, they’re worth having. But if you don’t completely pay off your bill at the end of the month, you’ll owe an enormous amount of interest on the remainder, usually about 18%. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 52) - And your degree was almost certainly worth it– even if you’re only considering the financial return on investment and not including the benefits of making lifelong friends, building priceless habits of discipline and exposing yourself to new ideas as an educated citizen. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 54) - Think about it: our largest purchases are almost always made on credit, and people with good credit save thousands of pounds on these purchases. Credit has a far greater impact on your finances than saving a quid a day on a coffee. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 56) - Your credit report gives potential lenders basic information about you, your accounts and your payment history. It tracks all credit- related activities (e.g. credit cards and loans), although recent activities are given higher weight. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 57) - Your credit score is a single, easy- to- read number between 0 and 1,000 that represents your credit risk to lenders. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 57) - One of the key differences between rich people and everyone else is that rich people plan before they need to plan. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 58) - How do you choose the right credit card? I have a few simple rules that I use when choosing my own cards: ▪ Don’t accept credit card offers that come in the post ▪ Squeeze every reward you can out of your credit cards. ▪ Pick a good one, then move on with your life. Now here’s how to do it. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 61) - Bottom line: It’s almost always worth getting a rewards card. Be sure to do your homework and pick one where you value the rewards. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 62) - Have some standards, people. You wouldn’t marry the first person who touched your elbow. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 63) - Don’t go card crazy. Now that you’re in the market, you might be tempted by any number of card offers. But don’t overdo it. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 64) - “It depends on how long you’ve been managing credit. The less information in your credit report, the higher the prominence of each new report. For example, if you only have one credit card in your name, when you open another account, the weight of that action is more than it would be ten years down the line.” (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 67) - 1. Pay off your credit card regularly. Yeah, we’ve all heard it, but what you may not know is that your debt payment history represents 35% of your credit score– the largest chunk. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 68) - Negotiate a lower APR. Your APR, or annual percentage rate, is the interest rate your credit card company charges you. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 71) - 4. Keep your main cards for a long time, and keep them active– but also keep them simple. Lenders like to see a long history of credit, which means that the longer you hold an account, the more valuable it is for your credit score. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 72) - Play it safe: if you have a credit card, keep it active using an automatic payment at least once every three months. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 72) - Now the one tricky part: If you decide to get a new card, should you close your old card? (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 74) - The typical advice is to keep cards open for as long as possible, which is generally smart. But if you have lots of cards that you never use, reconsider this. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 74) - As long as you have good credit, the long- term impact will be minimal and you’ll sleep easier at night with a simple financial system you can easily keep track of. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 74) - It involves getting more credit to improve your credit utilisation rate, which is simply how much you owe divided by your available credit. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 75) - To improve your credit utilisation rate, you have two choices: Stop carrying so much debt on your credit cards (even if you pay it off each month), or increase your total available credit. Because we’ve already established that if you’re doing this, you’re debt- free, all that remains for you to do is to increase your available credit. Here’s how: call up your card company and ask for a credit increase. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 75) - Use your credit card’s secret perks! (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 76) - As discussed, credit cards also offer rewards programmes that give you cashback, airline tickets and other benefits, but most people don’t take advantage of all the free stuff they can get. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 77) - Most important, your credit card automatically tracks your spending, making it easy for software to download and categorise your expenses. For these reasons, I put almost all my purchases on a credit card– especially the large ones. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 78) - Think ahead before closing accounts. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 79) - Don’t play the zero per cent transfer game. Some people have started playing the 0% transfer game to profit from credit cards by making balance transfers or taking cash advances. They take the introductory 0% APR that you get when you open many credit cards (which usually only lasts for six months). Then they borrow money from the card at this low rate and stick it in a high- interest savings account, which allows them to profit from the interest. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 82) - Focus on the Big Wins to get the big results. They may not be as obvious or sexy as jumping from account to account and getting a few extra quid, but the Big Wins will make you rich over the long term. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 84) - Some people differentiate debts by calling them “good debt” and “bad debt”, depending on if the debt appreciates (education) or depreciates (car) over time. Others despise debt altogether. Whatever the case, most of us have a lot of it. And it doesn’t feel good. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 85) - Dr Brad Klontz (yourmentalwealth.com), a professor in financial psychology, coined the term “invisible money scripts” to describe “typically unconscious, trans- generational beliefs about money” that are developed in childhood and drive your behaviour today. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 85) - But I have no sympathy for people who complain without a plan. And a plan means that if you’re in debt, you should know how much you owe and the exact day your debt will be paid off. Almost nobody does. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 89) - Most of us accept our student debt as is. We get a bill each month, we pay it and we shrug, frustrated about the burden of our loans but not really sure if we can do anything. Guess what: you can change your student loan payments. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 90) - Not only is it a psychological victory to know that you’re consciously working to pay off your debt, but you’ll also be able to focus on investing sooner. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 90) - Most people don’t get into serious credit card debt overnight. Instead, things go wrong little by little until they realise they’ve got a serious problem. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 93) - The good news is that credit card debt is almost always manageable if you have a plan and take disciplined steps to reduce it. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 93) - Now, almost nothing makes people feel guiltier than having credit card debt. Seventy- five per cent of Americans claim they don’t make major purchases on their credit card unless they can pay it off immediately. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 95) - These companies have become very good at extracting more money from us, and we’ve become very bad at knowing enough to say no. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 95) - Third, and potentially most damaging, debt can affect you emotionally. It can overwhelm you, leading you to avoid opening your bills, causing more late payments and more debt, in a vicious circle of doom. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 97) - Even a tiny increase in how much you pay every month can dramatically shorten your time to being debt- free. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 98) - Figure out how much debt you have. You wouldn’t believe how many people don’t do this and continue blindly paying off any bills that come in with no strategic plan. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 101) - 2. Decide what to pay off first. Not all debts are created equal. Different cards charge you different interest rates, which can affect what you decide to pay off first. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 102) - Bottom line: don’t spend more than five minutes deciding. Just pick one method and do it. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 103) - 3. Negotiate down the APR. I’m a huge fan of taking 50/ 50 odds if the upside is big and it takes only five minutes of my time. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 103) - 4. Decide where the money to pay off your credit cards will come from. One common barrier to paying off debt is wondering where the money should come from. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 105) - You’d be surprised that many people don’t even have to cut much spending to pay off debt quickly. They just have to stop spending on random items, get conscious about making debt a priority and set up aggressive automatic transfers to pay off their credit card debt. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 106) - Remember the philosophy behind the 85% solution: the goal is not to research every last corner to decide where the money will come from; it’s action. Figure out how much debt you have, decide how you want to pay it down, negotiate your rates and get started. You can always fine- tune your plan and amount later. (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 107) - 1Get your credit score and credit report (1 hour). (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 108) - 2Set up your credit card (2 hours). (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 108) - 3Make sure you’re handling your credit cards effectively (3 hours). (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 108) - 4If you have debt, start paying it off (1 week to plan, then start paying more). (Capítulo: CHAPTER 1: Optimise Your Credit Cards | Página: 109) ## CHAPTER 2: Beat the Banks (25) - Now, in Week 2, we’re going to get your bank accounts set up right. (Capítulo: CHAPTER 2: Beat the Banks | Página: 110) - People claim they want good customer service, but really, they just stick with the same old horrible banks for decades. (Capítulo: CHAPTER 2: Beat the Banks | Página: 112) - Not only do they levy fee after fee, they launch marketing campaigns to trick customers into signing up for services they don’t need and which, if they understood the terms, they would never agree to. (Capítulo: CHAPTER 2: Beat the Banks | Página: 113) - Your current account is the backbone of your financial system. It’s where your money will first go before it’s “filtered” to different parts of your system, like your savings account, your investing account and your guilt- free spending. (Capítulo: CHAPTER 2: Beat the Banks | Página: 117) - Think of savings accounts as places for short- term (one month) to midterm savings (five years). (Capítulo: CHAPTER 2: Beat the Banks | Página: 117) - I say “technically” because on a practical level, the interest on your savings account is essentially meaningless. (Capítulo: CHAPTER 2: Beat the Banks | Página: 117) - (Interestingly, if we’re getting technical, many people lose money every day their money is in savings, since inflation erodes the real purchasing power of your cash. (Capítulo: CHAPTER 2: Beat the Banks | Página: 118) - The most important practical difference between checking accounts and savings accounts is that you withdraw money regularly from your current account, but you rarely withdraw from your savings account. (Capítulo: CHAPTER 2: Beat the Banks | Página: 119) - I want the best current account, the best savings account and the best investment account– no matter where they are. (Capítulo: CHAPTER 2: Beat the Banks | Página: 120) - But it’s not just about your immediate earnings– it’s about developing the right habits. (Capítulo: CHAPTER 2: Beat the Banks | Página: 120) - Most basic option (good for lazy people): A current account and a savings account at any local bank. (Capítulo: CHAPTER 2: Beat the Banks | Página: 121) - option + small optimisation (recommended for most people): This option means opening accounts at two separate institutions: a no- fee current account at your local bank and a high- yield online savings account. (Capítulo: CHAPTER 2: Beat the Banks | Página: 121) - Advanced setup + full optimisation (perfect for people who read things like Lifehacker and The 4- Hour Workweek): This setup consists of maintaining several current accounts and savings accounts at different banks, usually to eke out the most interest and services that various banks have to offer. (Capítulo: CHAPTER 2: Beat the Banks | Página: 123) - Depending on what accounts you already have and what setup you’ve opted to go with, getting this part of your financial infrastructure squared away may be as easy as making small changes to accounts you’ve had for a while. (Capítulo: CHAPTER 2: Beat the Banks | Página: 123) - Beyond just the type of accounts offered, there’s more to consider when choosing your bank( s). I look for three things: trust, convenience and features. (Capítulo: CHAPTER 2: Beat the Banks | Página: 124) - Since a bank is the first line of defence in managing your money, it needs to be easy to put money in, get money out and transfer money around. (Capítulo: CHAPTER 2: Beat the Banks | Página: 126) - So focus on the Big Wins, not on rate jumping. (Capítulo: CHAPTER 2: Beat the Banks | Página: 127) - Whether they’re accounts you just opened or accounts you already had, you need to optimise your current and savings accounts. This means you shouldn’t be paying fees or minimum deposits. (Capítulo: CHAPTER 2: Beat the Banks | Página: 130) - Maybe I’m too demanding, but if I’m lending a bank my money to relend out, I don’t believe I should have to pay them additional fees. (Capítulo: CHAPTER 2: Beat the Banks | Página: 130) - The most painful and expensive fees are usually overdraft fees– which is the fee your bank charges you if you don’t have enough money in your current account to cover a purchase. (Capítulo: CHAPTER 2: Beat the Banks | Página: 131) - Remember, with a customer- acquisition cost of more than £ 100, banks want to keep you as their customer. So use this information to your advantage and make the call next time you see any fees levied on your account. (Capítulo: CHAPTER 2: Beat the Banks | Página: 134) - 1Open a current account or assess the one you already have (1 hour). (Capítulo: CHAPTER 2: Beat the Banks | Página: 136) - 2Open an online high- interest savings account (3 hours). (Capítulo: CHAPTER 2: Beat the Banks | Página: 137) - 2aOptional: open an online current account (2 hours). (Capítulo: CHAPTER 2: Beat the Banks | Página: 137) - 3Fund your online savings account (1 hour). (Capítulo: CHAPTER 2: Beat the Banks | Página: 137) ## CHAPTER 3: Get Ready to Invest (30) - Saving a little money here and there is not enough, despite what you read in the myriad books and blogs filled with tips and tales of frugality. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 139) - Put simply, saving is not enough. You need a way to put that money to work for you so it earns more than even the highest- yielding savings account, and investing is the first and best way to do it. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 139) - Investing may seem intimidating, but it’s actually quite painless. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 140) - Although it’s true that some of them might pay into a pension– whether a workplace pension or privately– that’s probably the extent of their investments. And yet these are the most important investing years of our lives! (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 141) - It’s ironic that people are afraid of “possibly” losing money in the stock market, when they will certainly run out of money if they don’t invest. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 142) - Although some people are limited by circumstances, most people will never get rich simply because they have poor attitudes and behaviours about money. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 144) - One thing I’ve learned in the self- development business: we all have lots of reasons why we aren’t doing something we “should”, like investing, flossing, or starting a business. No time, no money, not sure where to start, etc. Sometimes the truth is simpler: we just don’t want to. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 147) - To bring this close to home, ask your parents what they worry about most. I’ll bet you their answer is, simply, “money”. Yet we’re not paying much more attention to our finances than our parents did. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 147) - In other words, a project manager could earn £ 50,000 per year and have a higher net worth than a doctor earning £ 250,000 per year– if the project manager saves and invests more over time. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 148) - Information alone is not enough– you already “know” about compound interest and if you simply needed information, you would have already found it. The real problem, and the solution, is you. Your psychology, your emotions, your invisible scripts … all of it. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 149) - In reality, give me ten minutes with your calendar and your spending, and I’ll show you your actual priorities– and how to fix them. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 150) - Despite wild rides in the stock market, the best thing you can do is think long term and start investing early. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 151) - Rung 1: Your employer must offer matched pension contributions on your workplace scheme, so take full advantage of it and don’t opt out (which you can). (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 153) - Rung 2: Pay off your credit card and any other debt. The average credit card APR is 14% and many APRs are higher. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 153) - Rung 3: Open up a stocks and shares ISA (see page 109) and contribute as much money as possible to it. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 153) - Rung 4: If you have money left over, go back to your pension and contribute as much as possible to it (this time above and beyond your employer matched contributions). (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 154) - 5: If you still have money left to invest, pay extra on any mortgage debt you have and consider investing in yourself: whether it’s starting a company or getting an additional degree, there’s often no better investment than your own career. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 154) - Pension Benefit #1: Using Pre- tax Money Means an Instant 20%- plus Accelerator. Retirement accounts offer you a deal: you promise to invest your money for the long term and, in exchange, they give you huge tax advantages. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 155) - Pension Benefit #2: Your Employer Match Means Free Money. Your employer must also contribute, meaning you get automatic free money for investing– a win- win situation. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 156) - However, be aware that the lifetime tax- free sum has been cut– in 2019 it was £ 1.055 million, so you’ll be taxed on contributions above that. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 156) - Pension Benefit #3: Automatic Investing. With auto- enrolment, your money is sent into your investment account without you having to do anything. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 157) - Remember to be aggressive with how much you contribute to your pension, because every pound you invest now will likely be worth many more times that in the future. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 160) - You don’t need to be working or earning a salary to open a stakeholder pension– you can pay up to £ 3,600 a year into one if you are not earning. You can also open one if you are self- employed. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 161) - Like other types of ISA, you can pay in up to £ 20,000 each tax year, but this is not for you if you want quick access to your money– you should be prepared to invest for at least five years before you withdraw any funds. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 163) - Nevertheless, unless you really have no other recourse, you should not withdraw money from your retirement account. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 165) - alternative- investment accounts available, but more is lost from indecision than bad decisions. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 166) - This is the predictable outcome when a low- cost provider raises venture capital and needs to grow rapidly. It either finds more customers or finds a way to make more money from each customer. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 171) - 1Open your workplace pension (3 hours). If you haven’t been auto- enrolled, get the paperwork from your HR manager if they offer a different scheme and fill it out. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 175) - 2Come up with a plan to pay off your debt (3 hours). Get serious about getting out of debt. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 175) - 3Open a stocks and shares ISA and set up automatic payments (1 hour). Send as much as you can, but even £ 50/ month is fine. (Capítulo: CHAPTER 3: Get Ready to Invest | Página: 176) ## CHAPTER 4: Conscious Spending (54) - That kind of dedication is rare these days. We spend more on our mobile phones than most people in other countries do on their mortgages. We buy shoes that cost more than our grandparents paid for their cars. Yet we don’t really know how much these individual costs add up to. (Capítulo: CHAPTER 4: Conscious Spending | Página: 178) - In reality, I love when people are unapologetic about spending on the things they love. (Capítulo: CHAPTER 4: Conscious Spending | Página: 181) - If you decide that spending £ 4 on Cokes when you eat out isn’t worth it– and you’d rather save £ 10 each week for a movie– that’s not being cheap. That’s consciously deciding what you value. (Capítulo: CHAPTER 4: Conscious Spending | Página: 182) - Instead, we were taught to generically apply the principle of “Don’t spend money on that!” to everything, meaning we try halfheartedly to cut back, fail, then guiltily berate ourselves– and continue overspending on things we don’t even care about. (Capítulo: CHAPTER 4: Conscious Spending | Página: 182) - Keeping up with friends is a full- time job. (Capítulo: CHAPTER 4: Conscious Spending | Página: 183) - The mindset of conscious spenders is the key to being rich. (Capítulo: CHAPTER 4: Conscious Spending | Página: 183) - Again, conscious spending is not about simply cutting your spending on various things. It’s about making your own decisions about what’s important enough to spend a lot on and what’s not, rather than blindly spending on everything. (Capítulo: CHAPTER 4: Conscious Spending | Página: 183) - THE PROBLEM IS THAT HARDLY ANYONE IS DECIDING WHAT’S IMPORTANT AND WHAT’S NOT, DAMMIT! That’s where the idea of conscious spending comes in. (Capítulo: CHAPTER 4: Conscious Spending | Página: 185) - Along with making you feel comfortable with your spending, a plan keeps you moving toward your goals instead of just treading water. (Capítulo: CHAPTER 4: Conscious Spending | Página: 185) - The key here is that John knows himself and has set up systems to support his weaknesses. (Capítulo: CHAPTER 4: Conscious Spending | Página: 188) - The À La Carte Method works for three reasons: (Capítulo: CHAPTER 4: Conscious Spending | Página: 191) - 1. YOU’RE PROBABLY OVERPAYING ALREADY. (Capítulo: CHAPTER 4: Conscious Spending | Página: 191) - 2. YOU’RE FORCED TO BE CONSCIOUS ABOUT YOUR SPENDING. (Capítulo: CHAPTER 4: Conscious Spending | Página: 192) - 3. YOU VALUE WHAT YOU PAY FOR. (Capítulo: CHAPTER 4: Conscious Spending | Página: 192) - They’ve built an infrastructure to do this automatically so that by the time money ends up in their current account, they know they can spend it guilt- free. (Capítulo: CHAPTER 4: Conscious Spending | Página: 194) - So let’s get on with the specifics of how you can make your own Conscious Spending Plan. Don’t get overwhelmed by the idea that you need to create a massive budgeting system. All you need is to just get a simple version ready today and work to improve it over time. (Capítulo: CHAPTER 4: Conscious Spending | Página: 196) - A good rule of thumb is that fixed costs should be 50% to 60% of your take- home pay. (Capítulo: CHAPTER 4: Conscious Spending | Página: 197) - Finally, once you’ve gotten all your expenses filled in, add 15% for expenditures you haven’t counted yet. (Capítulo: CHAPTER 4: Conscious Spending | Página: 198) - A flat 15% will likely cover you for things you haven’t figured in, and you can get more accurate as time goes (Capítulo: CHAPTER 4: Conscious Spending | Página: 199) - Long- Term Investments This bucket includes the amount you’ll send to your pension scheme and stocks and shares ISA each month. (Capítulo: CHAPTER 4: Conscious Spending | Página: 199) - Remember, the more aggressively you save now, the more you’ll have later. (Capítulo: CHAPTER 4: Conscious Spending | Página: 200) - Savings Goals This bucket includes short- term savings goals (like holiday gifts and vacation), mid- term savings goals (a wedding in a few years) and larger, longer- term goals (like a deposit on a house). (Capítulo: CHAPTER 4: Conscious Spending | Página: 200) - Gifts for friends and family. (Capítulo: CHAPTER 4: Conscious Spending | Página: 201) - Don’t let things like gifts surprise you. You already know the common gifts you’ll buy: holiday and birthday presents. (Capítulo: CHAPTER 4: Conscious Spending | Página: 201) - Planning ahead isn’t “weird”, it’s smart. You already know you’re going to buy (Capítulo: CHAPTER 4: Conscious Spending | Página: 201) - When it comes to your Rich Life, if you’re counting pennies or calculating a sandwich as being worth $ 90,000, you’ve taken a very wrong turn somewhere. (Capítulo: CHAPTER 4: Conscious Spending | Página: 202) - Your wedding (whether you’re engaged or not). (Capítulo: CHAPTER 4: Conscious Spending | Página: 203) - Buying a house. If you’re thinking about buying a house in a few years, (Capítulo: CHAPTER 4: Conscious Spending | Página: 204) - Crazy, right? Nobody thinks like this, but it’s truly eye- opening when you plot your future spending for the next few years. (Capítulo: CHAPTER 4: Conscious Spending | Página: 204) - Guilt- Free Spending Money After all that spending, investing and saving, this bucket contains the fun money– the stuff you can use for anything you want, guilt- free. (Capítulo: CHAPTER 4: Conscious Spending | Página: 205) - Optimising your spending can seem overwhelming, but it doesn’t have to be. You can do an 80/ 20 analysis, which often reveals that 80% of what you overspend is used towards only 20% of your expenditure. (Capítulo: CHAPTER 4: Conscious Spending | Página: 206) - Brian was smart to focus on changing the things that mattered. Instead of promising that he’d stop spending money on Cokes every time he ate out, he picked the Big Wins that would really make an impact on his total pounds amount. (Capítulo: CHAPTER 4: Conscious Spending | Página: 210) - Do you know people who get so obsessed with something new that they go completely overboard and burn out? I would rather do less but make it sustainable. (Capítulo: CHAPTER 4: Conscious Spending | Página: 211) - She would rather dream about running three times a week than actually run once a week. (Capítulo: CHAPTER 4: Conscious Spending | Página: 211) - Although you might expect me to get really excited about someone contributing $ 495/ month to their savings, I’ve come to realise that when a person goes from one extreme to another, the behavioural change rarely lasts. (Capítulo: CHAPTER 4: Conscious Spending | Página: 211) - Habits don’t change overnight and, if they do, chances are they won’t be sustainable. (Capítulo: CHAPTER 4: Conscious Spending | Página: 212) - Whether you’re implementing a change in your personal finances, eating habits, exercise plan, or whatever … try making the smallest change today. Something you’ll hardly notice. (Capítulo: CHAPTER 4: Conscious Spending | Página: 213) - I recommend the envelope system, in which you allocate money for certain categories like eating out, shopping, rent and so on. (Capítulo: CHAPTER 4: Conscious Spending | Página: 214) - Many of the people who’ve written me saying they live month to month actually have more wiggle room in their budgets than they think (cooking instead of eating out, for example, or not buying a new mobile phone every year). They just don’t want to change their spending. (Capítulo: CHAPTER 4: Conscious Spending | Página: 216) - Until then, here are three strategies you can use to earn more. (Capítulo: CHAPTER 4: Conscious Spending | Página: 217) - Negotiate a Raise If you already have a job, it’s a no- brainer to negotiate for a raise. (Capítulo: CHAPTER 4: Conscious Spending | Página: 217) - Remember that getting a raise is not about you. It’s about you demonstrating your value to your employer. (Capítulo: CHAPTER 4: Conscious Spending | Página: 217) - If you can’t figure out the exact results you’re driving, ask someone at work who’s more experienced and knows how to tie your work to company results. (Capítulo: CHAPTER 4: Conscious Spending | Página: 220) - This seems really weird, but negotiating is not a natural behaviour. (Capítulo: CHAPTER 4: Conscious Spending | Página: 221) - Get a Higher- Paying Job This takes us to the second way to increase your income. If you find that your existing company doesn’t offer you growth potential, or you’re in the process of getting a new job, negotiating your salary will never be easier. (Capítulo: CHAPTER 4: Conscious Spending | Página: 223) - Do Freelance Work One of the best ways to earn more is to start freelancing. (Capítulo: CHAPTER 4: Conscious Spending | Página: 224) - Maintaining Your Spending Plan Once you’ve done what you can to design and implement a Conscious Spending Plan that you’re comfortable with, give yourself some time to settle into a rhythm with it. (Capítulo: CHAPTER 4: Conscious Spending | Página: 225) - So another key to having a plan you’ll use is to account for the unexpected and build in a bit of flexibility. (Capítulo: CHAPTER 4: Conscious Spending | Página: 226) - Unknown irregular events (surprise vet bills or parking fines). (Capítulo: CHAPTER 4: Conscious Spending | Página: 226) - Unexpected one- time income. Sometimes money falls in your lap, like a birthday gift, a tax rebate or an unexpected freelance contract. Believe it or not, I don’t encourage you to save all of this money. (Capítulo: CHAPTER 4: Conscious Spending | Página: 227) - Raises. A raise is different from one- time income because you’ll get it consistently and it’s therefore much more important to do the right thing financially. (Capítulo: CHAPTER 4: Conscious Spending | Página: 228) - It’s too easy to think a single raise lets you move up to a totally different financial level in a single step. (Capítulo: CHAPTER 4: Conscious Spending | Página: 228) - The best part about setting up a strategic Conscious Spending Plan is that it guides your decisions, letting you say no much more easily– “Sorry, it’s not in my plan this month”– and freeing you up to enjoy what you do spend on. (Capítulo: CHAPTER 4: Conscious Spending | Página: 229) - Deciding to change the way you spend is the most difficult part of this book. It involves making choices and saying no to certain things. (Capítulo: CHAPTER 4: Conscious Spending | Página: 229) ## CHAPTER 5: Save While Sleeping (10) - That’s because automating your money will be the single most profitable system you ever build. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 232) - Instead, we’re going to go on the offensive by building a system that acknowledges our normal human behaviour– we get bored, distracted, and demotivated– and uses technology to ensure we’re still growing our money. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 233) - That’s like being a real- life Mario Brother, where every level you beat means your life gets progressively more difficult. Why would you want that? (Capítulo: CHAPTER 5: Save While Sleeping | Página: 234) - this system will accommodate irregular income with no problem– you just need to take an extra step. Here’s the quick summary of what you’re going to do: in months where you make a lot, you’re going to save and build a buffer for the slow months. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 252) - Once you’ve saved up three months of money as a cushion, congratulations! (To go the extra mile, work toward a six- month emergency fund.) You’ve built a stable buffer and you can simulate a stable income. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 252) - Money exists for a reason– to let you do what you want to do. Yes, it’s true, every pound you spend now would be worth more later. But living only for tomorrow is no way to live. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 255) - I love this system for three reasons: (Capítulo: CHAPTER 5: Save While Sleeping | Página: 257) - Your automated money flow takes advantage of human psychology. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 257) - Your system will grow with you. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 257) - Money should be about all the good things it can do, not the bad. To do that, you can’t agonise over thousands of microdecisions per month– you have to focus on the bigger picture. (Capítulo: CHAPTER 5: Save While Sleeping | Página: 258) ## CHAPTER 6: The Myth of Financial Expertise (12) - Think about that for a second. Fifty- seven wine experts couldn’t even tell they were drinking two identical wines. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 263) - But ultimately, expertise is about results. You can have the fanciest degrees from the fanciest schools, but if you can’t perform what you were hired to do, your expertise is meaningless. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 263) - In truth, being rich is within your control, not some expert’s. How rich you are depends on the amount you’re able to save and on your investment plan. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 264) - More information is not always good, especially when it’s not actionable and causes you to make errors in your investing. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 266) - The only long- term solution is to invest regularly, putting as much money as possible into low- cost, diversified funds, even in an economic downturn. This is why long- term investors have a phrase they use: focus on time in the market, not timing the market. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 268) - Survivorship bias exists because funds that fail are not included in any future studies of fund performance for the simple reason that they don’t exist anymore. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 270) - The key takeaway is that most people don’t actually need a financial adviser– you can do it all on your own and come out ahead. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 277) - The average person doesn’t understand how crushing these fees really are because the maths is extremely counterintuitive. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 283) - Mutual funds– which are simply collections of different investments like stocks or bonds– are often considered the simplest and best way for most people to invest. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 285) - “Assuming a fifty- year horizon, the second portfolio would have lost 63% of its potential returns to fees,” Mr. Bogle said. Think about that. A simple 2% in fees can cost you over half of your investment returns. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 288) - So, the safe assumption is that actively managed funds will too often fail to beat or match the market. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 290) - Yet you and I know that money isn’t purely rational– even seeing the clear maths here. It’s emotional. (Capítulo: CHAPTER 6: The Myth of Financial Expertise | Página: 290) ## CHAPTER 7: Investing Isn’t Only for Rich People (56) - Basically, I’m always on the lookout for ways to spend less time and get better results. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 295) - Automatic investing works for two reasons: (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 295) - Lower expenses. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 296) - It’s automatic. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 296) - Yes, in theory it’s possible for you to lose all your money, but if you’ve bought different investments to create a balanced (or “diversified”) portfolio, you won’t. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 297) - Imagine one day you woke up and you had enough money in your accounts to never work again. In other words, your investments were generating so much money that your money was actually producing more money than your salary. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 299) - It’s an incredibly influential idea in personal finance: money makes money and, at a certain point, your money is generating so much new money that all of your expenses are covered. This is also known as being “financially independent” (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 299) - Many call this “retiring early” (RE); together, they’re Financial Independence + Retiring Early = FIRE. There’s “LeanFire”, which is people who’ve decided they can live on a “lean” amount of money– often £ 30,000 to £ 50,000 a year in perpetuity. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 299) - When you hit the point of financial independence, you’re being paid to live because of decisions you made years ago. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 300) - Most people never think about their earnings and spending in this way. As a result, they do the same thing as most other people: save a tiny amount every year, end up working for decades and find themselves ranting about taxes on Twitter without knowing what the hell they’re talking about. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 302) - My suggestion: Remember that life is lived outside the spreadsheet. Be as aggressive as you want with your goals. Dream bigger than you ever thought! But remember that money is just a small part of a Rich Life. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 303) - I hate to say it, but not everyone is a winner. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 305) - Asset allocation is your plan for investing, the way you distribute the investments in your portfolio between stocks, bonds and cash. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 305) - It turns out that the way you allocate your portfolio– whether it’s 100% stocks or 90% stocks and 10% bonds– makes a profound difference on your returns. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 305) - Stocks When you buy stock, you buy shares of a company. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 308) - Each index is like a college: there are committees that determine the criteria for allowing companies on their index, and they may change those criteria over time. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 309) - Stocks have been a good way to earn significant returns over the long term, but I discourage you from picking individual stocks, because it’s extremely difficult to choose winning ones on your own. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 309) - If these experts who devour annual reports and understand complicated balance sheets can’t beat the market, what chance do you have of picking stocks that will go up? You have very little chance. That’s why individual investors like you and me should not invest in individual stocks. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 309) - Bonds are essentially IOUs from companies or the government. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 310) - Also, bonds, especially government bonds, are generally stable and let you decrease the risk in your portfolio. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 310) - But because bonds are such a safe, low- risk investment, the return– even on a highly rated bond– is much lower than it would be on an excellent stock. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 310) - Rich people, on the other hand, tend to become more conservative because they have so much money. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 311) - Traditionally, cash has been the third part of a portfolio, alongside stocks and bonds. You want to have totally liquid cash on hand for emergencies, and as a hedge if the market tanks. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 312) - It is important to diversify within stocks, but it’s even more important to allocate across the different asset classes– like stocks and bonds. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 312) - In determining where to allocate your assets, one of the most important considerations is what returns each category offers. Of course, based on the different types of investments you make, you can expect different returns. Higher risk generally equals higher potential for reward. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 313) - Your asset allocation is actually one of the most important decisions you’ll make in life– it’s a decision that could be worth hundreds of thousands of pounds to you and, for some, millions. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 314) - In reality, asset allocation is one of the only things that matters and I think you’re smart enough to learn it. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 314) - Age and risk tolerance matter. If you’re twenty- five years old and have dozens of years to grow your money, a portfolio made up of mostly stock- based funds probably makes sense. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 314) - Bonds act as a counterweight to stocks, generally rising when stocks fall and reducing the overall risk of your portfolio. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 314) - If you’re in your twenties or early thirties and you don’t necessarily need to reduce your risk, you can simply invest in all- stock funds and let time mitigate any risk. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 315) - But in your thirties and older, you’ll want to begin balancing your portfolio with bonds to reduce risk. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 317) - As a financial adviser once told me: “Once you’ve won the game, there’s no reason to take unnecessary risk.” (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 317) - Diversification is about safety in the long term. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 318) - The fact that performance varies so much in each asset class means two things. First, if you’re trying to make a quick buck off investing, you’ll usually lose money, because you have no idea what will happen in the near future. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 319) - Second, you should own different categories of stocks (and maybe bonds) to balance out your portfolio. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 319) - And honestly, if you’re nervous about investing 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. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 320) - In 1924, mutual funds, which are just baskets filled with different types of investments (usually stocks), were invented. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 321) - The funds provide instant diversification because they hold many different stocks. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 322) - Active management can’t compete with passive management, which takes us to index funds, the more attractive cousin of mutual funds. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 323) - Bogle argued that index funds would offer better performance to individual investors. Active mutual fund managers could not typically beat the market, yet they charged investors unnecessary fees. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 324) - Target date funds are my favourite investment of all because they embody the 85% Solution: not exactly perfect, but easy enough for anyone to get started– and they work just fine. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 328) - Target date funds are simple funds that automatically diversify your investments for you based on when you plan to retire. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 328) - Target date funds are actually “funds of funds”, or collections made up of other funds, which offer automatic diversification. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 329) - Target date funds aren’t perfect for everyone, because they work on one variable alone: when you plan to retire. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 329) - By now, you should know what you want to invest in: a target date fund or index funds. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 330) - You know how I love reducing choice to get people to take action? Well, the companies that offer pensions take this to an extreme: they offer a few investment funds for you to choose from– usually the options are called something like aggressive investments (which will be a fund of mostly stocks), balanced investments (this fund will contain stocks and bonds) and conservative investments (a more conservative mix of mostly bonds). (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 331) - The easiest investment is a target date fund, or fund of funds. You can just buy it, set up automatic monthly contributions and forget about it. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 332) - As we discussed earlier, the key to constructing a portfolio is not picking killer stocks! It’s figuring out a balanced asset allocation that will let you ride out storms and slowly grow, over time, to gargantuan proportions. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 338) - As we know, lower risk generally equals lower reward. But the coolest thing about asset allocation is that you can actually reduce your risk while maintaining an equivalent return. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 340) - You cannot just pick random funds and expect to have a balanced asset allocation. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 342) - In other words, by investing over time, you don’t try to time the market. You use time to your advantage. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 344) - And investing isn’t just about maths, but about the very real effects of your emotions on your investing behaviour. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 344) - but remember, you’re taking a forty- or fifty- year outlook on investing– it’s not about the short term. This is the cost of constructing your own perfect portfolio. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 346) - If you do buy real estate, regardless of whether it’s to live in or to invest in, be sure to keep funding the rest of your investment areas– whether that’s a target date fund or your own portfolio of index funds. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 347) - In aggregate, art investments may be quite profitable, but the trick is choosing which individual pieces will appreciate– and as you can imagine, that isn’t easy. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 348) - Just make sure you have a fully functioning portfolio first, meaning you’ve completed the Ladder of Investing, you have six months of emergency funds and you limit your exposure by periodically rebalancing. (Capítulo: CHAPTER 7: Investing Isn’t Only for Rich People | Página: 355) ## CHAPTER 8: How to Maintain and Grow Your System (6) - But I also see the dark side of blindly following the idea of being the best without reflecting on why you’re working so hard. (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 359) - I’ve seen too many people decide to take control of their finances (good), then change their lives to save money (good), then continue saving and become increasingly aggressive (not so good) and finally end up “living in the spreadsheet”, where they spend each day counting how much their money has grown (very bad). (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 359) - What’s your street- level motivation? You could create some lofty life purpose– or you could take a ten- minute walk and figure out what gets you excited at this exact moment. The answers are often a lot simpler than you think. (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 360) - Remember: because the rewards of investing as early as possible are so tremendous, one of your key drivers will be feeding as much as possible into your system. (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 362) - If you start earning more and move up tax brackets, the “marginal” amount– or the money in the higher tax bracket– is taxed at a higher rate, not the entire amount you earn. (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 371) - If you pick a target date fund or build a portfolio of index funds instead, you rarely have to think about selling. My advice: Save your sanity and focus on more important things. (Capítulo: CHAPTER 8: How to Maintain and Grow Your System | Página: 384) ## CHAPTER 9: A Rich Life (9) - It’s tempting to tinker with online calculators and asset allocations for years and years, but at a certain point– especially for my readers who have followed my lessons and automated their money– there’s a point where you got it right. You won the game. Now it just takes time, patience and feeding the system. (Capítulo: CHAPTER 9: A Rich Life | Página: 387) - Ignore the noise. Remember, investing shouldn’t be dramatic or even fun– it should be methodical, calm and as fun as watching grass grow. (Capítulo: CHAPTER 9: A Rich Life | Página: 394) - Look, there’s nothing wrong with wanting your day to be perfect. Let’s just acknowledge it and figure out how to achieve our goals. (Capítulo: CHAPTER 9: A Rich Life | Página: 407) - when it comes to you, your manager cares about two things– how you’re going to make him or her look better, and how you’re going to help the company do well. (Capítulo: CHAPTER 9: A Rich Life | Página: 420) - But it’s important to remember that you’re not just buying the car for today– you’re buying it for the next ten- plus years. (Capítulo: CHAPTER 9: A Rich Life | Página: 431) - Buying a house is the most complicated and significant purchase you’ll make, so it pays to understand everything about it beforehand. (Capítulo: CHAPTER 9: A Rich Life | Página: 437) - The bottom line here: Buy only if you’re planning to live in the same place for ten years or more. (Capítulo: CHAPTER 9: A Rich Life | Página: 439) - 1. Acknowledge that you’re probably not being realistic about how much things will cost– then force yourself to be. (Capítulo: CHAPTER 9: A Rich Life | Página: 448) - 3. You can’t have the best of everything, so use the P word. Priorities are essential. (Capítulo: CHAPTER 9: A Rich Life | Página: 448) ---