Five Finance Books Everyone Should Read Before Turning 30: A Discussion of Money, Management & Personal Finance

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1 Five Finance Books Everyone Should Read Before Turning 30: A Discussion of Money, Management & Personal Finance Dr. Adam Shisler ASDA President 12 University of Texas School of Dentistry

2 Disclaimer

3 Books? Why books?

4 Fab Five Titles The Millionaire Next Door The Investment Answer I Will Teach You to be Rich Trifecta Get Rich Slowly Financial Samurai The Simple Dollar

5 Shisler s Swanky Six The Millionaire Next Door The Investment Answer I Will Teach You to be Rich Trifecta Get Rich Slowly Financial Samurai The Simple Dollar

6 The Millionaire Next Door Thomas J Stanley, PhD William D Danko, PhD Doesn t promise to show you how to become a millionaire, but more defines wealth. Based on research, case studies and statistics it profiles those who are already millionaires and you draw conclusions.

7 Equation of Wealth UAW vs PAW Under Accumulator of Wealth Prodigious Accumulator of Wealth Net Worth = (AGE * PRE-TAX INCOME * 10%)

8 Many people who earn high incomes are NOT rich High Income Low Income Frugal WEALTHY Breaking Even (Spartan) Spender Breaking Even (Lavish) BROKE In order to be rich: You ve got to play good OFFENSE and DEFENSE Translation: earn a lot, develop frugal habits

Even (Lavish) BROKE In order to be rich: You ve got to play good

9 Snapshot of Wealthy 80% of America s millionaires are FIRST-generation rich 20% of millionaires are retired 50% of millionaires own a business On average, millionaires invest 20% of their household income each year.

50% of millionaires own a business On average,

10 Common Denominators Live well below your means Allocate time, energy, and money efficiently Financial independence more important than displaying high social status No economic outpatient care from parents No economic outpatient care to children Proficient in target marketing opportunities Choose the right occupation

status No economic outpatient care from parents No economic outpatient care to

11 Inverse Relation of Dr. s Dr s are TWICE as likely to be a UAW than a PAW 1 Two reasons: Professions require advanced degrees, individuals get a delayed start in the accumulation race. Most of the income during these educational pursuits is used to fund tuition, housing, and student loans rather than investment. American society has prescribed a lifestyle to these professions. Doctors are expected to live in an upscale neighborhood with multiple cars, a boat, and other luxury items. High Income Low Income Frugal WEALTHY Breaking Even (Spartan) Spender BREAKING EVEN (LAVISH) BROKE

accumulation race. Most of the income during these educational pursuits is used to fund tuition, housing, and student loans rather than investment.

12 Shisler s Sentence Summary

13 The Investment Answer Daniel C Goldie, CPA, CFP Gordon S Murray Jargon-free for all investors--experienced, beginner, and everyone in between--the Investment Answer distills the process into just FIVE DECISIONS.

14 The Five Investor Decisions The Do-It-Yourself Decision Use a broker or don t The Asset Allocation Decision Risk vs. Return The Diversification Decision Mix of assets in your portfolio The Active vs. Passive Decision Do you want an active or passive investing approach The Rebalancing Decision When to rebalance, how to judge performance.

Return The Diversification Decision Mix of assets in your portfolio The Active vs.

15 Shisler s Sentence Summary

16 I Will Teach You to be Rich Ramit Sethi The book for the materially ambitious yet financially clueless. 6-week personal finance program for 20-to-35-year-olds.

17 By failing to prepare, you are preparing to fail The single most important factor to getting rich is getting started, NOT being the smartest in the room. One of the key differences between rich people and everyone else is that rich people plan before they need to plan. More is lost from indecision than bad decisions

One of the key differences between rich people and everyone else is that rich

18 Conscious Spending Plan His definition of FRUGALITY: Choose the things you love enough to spend extravagantly on and then cut mercilessly the things you don t love. Fixed Costs Rent, Utilities, Debt, etc. Investments 401(k), Roth IRA Savings Vacations, House DP, Emergency Fund Guilt Free Spending Money Dining, Going out, Shopping 50 60% of take home pay 10% 5 10% 20 35%

19 Ladder of Personal Finance Rung 1 Invest to take full advantage of employer match 401K, this is free money and there is, quite simply, no better deal Rung 2 Pay off debt (credit/student) Rung 3 Open up a Roth IRA, contribute the most until you make too much Rung 4 If you have any money left over, go back and max your 401K ($18K/annual) Rung 5 Still money left? Open a regular nonretirement account and put as much as possible there.

contribute the most until you make too much Rung 4 If you have any money left over, go back and max your

20 Shisler s Sentence Summary

21 Trifecta the Blogosphere Why Blogs? Handy Micro snippets of digestible advice Rome wasn t built in a day, neither was my bank account

22 J.D. Roth Best blog by Time Most inspiring money blog by Money Core Values: Money is more about the mind than the math Spend less than you earn Plan, Have Goals, Do what works for you Do it now

23 Sam Dogen

24 Trent Hamm

27 How do I use blogs? Start my day with When I m bored When I need a reference, template, research

28 Who s on my team? Electronic Budget Tool Mint, Personal Capital, Quicken CPA/CFP Referred by fellow Pediatric Dentist Spouse / Partner

29 Final Thoughts

The Millionaire Next Door Building wealth takes discipline, sacrifice, and hard work

The Millionaire Next Door Building wealth takes discipline, sacrifice, and hard work When Authors Tom Stanley and William Danko went to investigate on how people get wealthy, they found something odd.