In Spending Your Path To Wealth: Navigating Yourself To True Wealth, Paul Heys separates the myths and non-truisms about investing from the facts and practical strategies that will help you learn how to save, spend, and invest wisely. Not since the Great Depression has such knowledge been so necessary as we continue to grapple with the financial crisis caused by the recent coronavirus pandemic.
Heys was vice president at Smith Barney, where he accumulated a wealth of investment information. He was also a flight instructor who taught others to do complicated, sometimes tedious, things in a thoughtful and calm manner. This experience has paid off in making Spending Your Way to Wealth an easy-to-follow guide that any potential investor can benefit from. Learning to invest properly takes some thought and, as Heys reveals in these pages, a strong ability to stay calm when the markets aren’t doing what you want.
Heys begins by meeting readers where they are. He explains that the actions people are likely to want to take when investing are normal, and he explores the psychology of why we make those decisions. As he shows, there is nothing wrong with being normal, but we want to achieve “normal plus” by learning to hold back to avoid the consequences that normal behavior might bring. He uses the metaphor of Odysseus and the Sirens to describe our own need for restraint. Ulysses had his men tied to the mast of the ship when they passed the Sirens so that he could hear their beautiful music but resisted the temptation to join them, which would have resulted in its destruction. Likewise, we must hold on to the mast when investing by refraining from making short-term instinctive decisions that will be detrimental to our long-term goals.
Before we discuss investing, Heys asks us to look at how we spend our money and how it reflects that we are normal. I especially liked his introduction of the concept of “dumping”. The spill is when we spend money beyond what we have to spend. For example, the generic brand of spaghetti sauce can meet our needs. The expensive trademark is more than what we need. The difference between the price of the generic brand and that of the brand is the money we spend, the money spent that didn’t need to be spent and could have been saved and invested. However, since it is normal for us to think that the brand is better, we are willing to spend money on it. We also tend to do things like assume that a more expensive bottle of wine is superior to a cheaper bottle, although Heys reveals studies show that people, when unaware of the price, can find out. that they appreciate cheaper wine more.
Credit cards are one of the main ways of pouring money with our credit cards, which allow us to buy things that we don’t need or cannot afford. Heys offers advice on how to manage our credit cards, and we really need help because only 35% of people pay off their credit cards every month. Others spend their money making only minimal payments and thus paying high interest rates that can even make buying the generic brand of spaghetti sauce, when charged on a credit card, several times more expensive. that if we bought the brand. Heys goes on to discuss the difference between price and value and how understanding this can teach us to avoid overturning. He also advocates keeping a monthly journal to become aware of the magnitude of the spills we are making. Most importantly, it makes us aware of how a small spill can be detrimental to our future. For example, if we leave a light on for twenty-four hours that does not need to be on, it will cost us 14 cents. Over time that will add up to $ 77,680 in a lifetime, and if that money was invested over forty years, $ 367,895. Who couldn’t use a third party over a million dollars? So why are we throwing it away with the lights on? Turning that light off can be the difference between living in the style we’re used to in retirement and watching every penny.
Heys then continues to provide investment advice. It’s more detailed than what I can cover here, but it explores investment behavior versus investor behavior, it demystifies risk, and it examines counterfeits such as “Don’t invest more than you can.” allow you to lose ”. He advocates investing for the long term in an advisory index fund directly from Warren Buffett. It also reminds us of how relative everything is, so we shouldn’t let others determine the value of an investment – it’s not about the price but its ability to meet our current and future needs. We don’t have to chase a high risk investment that could provide us with 25% returns if a low risk investment that will provide 10% returns meets our retirement needs. I find this advice heartwarming.
Most of all, in these last chapters on investing, I’ve appreciated the return to the idea that we have to hold back – tie ourselves to the mast when investing. We can learn this restraint by reducing noise. We don’t have to follow the stock market every day; we can stop listening to all the experts on television; we don’t even need to look at our statements daily, weekly or monthly. All quarters are sufficient, then we can adjust if necessary. The bottom line is to believe that the market always rises over time, and if we are there for the long term, we will benefit from staying the course.
Overall, Spending Your Way to Wealth is the only book I know of to reveal as many myths and misconceptions as many of us have about investing. I felt relieved after reading the book because I realized that what I had to do was so much easier than many might think. I don’t need to become a stock market expert. I just need to find a trusted financial advisor who will help me find the right funds for me. Then I have to contribute to these funds regularly, sit down and let them grow without trying to micro-manage them. The message of this book is simple and more to the point than any other financial advice book I’ve read, and I’ve read a lot.
Why aren’t these things taught in our schools so we can all start saving early? Spending Your Path To Wealth would be the perfect book to give every high school student as a graduation gift to get them on the right track. In fact, anyone interested in investing – and it really should be everyone since we will all need to retire someday – will benefit from reading this book, no matter how new or seasoned they are. ‘investor. In addition, Heys provides valuable information on its website, including an investment calculator to help you keep track of what you’re spending versus what it would be worth in the long run if you did. Check it out.