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moneysense.ca, 8/11/09
Financial Security: It’s Simpler Than You Think
[You can read the rest of Chapter 1 here. The book is available on Amazon.ca for around $15. I'll be posting my book review in the near future.]
moneysense.ca, 8/11/09
Seems like an interesting read; I like the approach of simplifying it down to the two approaches (rate of return and saving). Nice thread
The Rat
I liked the first chapter.
Seems that more people focus on rate of return than on rate of savings. It is more exciting to hit a “2-bagger” on a penny stock than to save more money. One gives you bragging rights, the other nobody wants to hear about.
I still spend more time thinking about rate of saving than rate of return. We see a better return from saving an additional 5% of our income than from earning an additional 5% on investment.
This won’t always be the case, of course. In the next few years the focus will shift to rate of return, while keeping on auto-pilot the learned lessons of saving and cashflow management.
@Ben: I agree. It is more sexy to talk about rate of return than the rate of savings, though arguably, it is the rate of savings that matters more. It is also the rate of savings that is completely under our control. The rate of returns depends on what the market gods decide to give investors though capturing almost all of that return is in our hands.
Author is making it sound simple. It’s not.
Only one variable is (sort of) under your control: saving rate. That return is not predicatable makes it difficult.
@Basil2: True but many factors that trip up average investors are under our control. We can control emotions by investing according to a plan. We can control expenses by paying attention to investing costs. I think it is simple, but it definitely is not easy.
rate of savings ok, rate of return is jibersih..theoretically it sounds fantastic, now get passed the criminal elite to make your rate of return..very hard to do unless you make investing a job.