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I read about 5 financial books a year. It used to be more, but as I have learned more and more, I find I am less drawn to financial books. Still, I persevere and read a few to learn something new (and we all know there is always more to learn) or to reassure myself that I am on the correct path. Much like reading blogs, there is always something to be gained.
Today I am going to review a book I just finished reading. (Full disclosure, I received a free copy of the book to review it). The book, Financially Empowered: Taking Charge of Your Financial Life is a collection of advice from 11 financial professionals. Therefore, the advice is given from a financial advisors standpoint.
So what did I think?
You would think that financial advisors would load this book with marketing. In fact, they don’t. They provide lots of factual information for basic financial planning. This is a great beginner’s book in personal finance covering topics such as setting up a financial plan with your spouse, budget and college planning, and some description of different asset classes.
Since it is written by financial advisors, they also provide information on who needs a financial plan and what you should ask your advisor before hiring them. They cover topics such as whole life insurance and annuities, things often seen negatively among Bogleheads or FIRE advocates.
What the book does not provide is a step by step guide to investing, a discussion of asset allocation, or a how-to on setting up both tax-advantaged (think Roth IRA) or taxable accounts. For that, you will have to look elsewhere. That being said, the book provides a lot of bread and butter information for a beginner in personal finance or anyone who is finally learning about retirement planning.
The book is broken down into 11 chapters each written by a different financial professional. Each chapter is helpful to a beginner and I found some more helpful than others.
Your future is in your hands
A basic, get motivated chapter. I was happy to see a discussion that social security will likely not be enough to fund retirement and a discussion of planning for the future.
What sets the wealthy apart
This chapter goes into more detail about setting up a financial plan. What are your short-term and long-term goals and how will you fund them? The author briefly discusses important items like insurance policies such as life and disability insurance, the different investment accounts (both retirement and taxable accounts available), and estate planning. It is a good checklist of items. This is a great start to understanding what we need, but not detailed enough to be useful for DIY investors.
It’s only money, honey: A guide to effective communication with your spouse and family about money and financial planning
I dug this chapter. The point is to talk to our spouses. Make sure we understand each other’s goals and desires for the future. Discuss risk tolerance and have the monthly finance meeting (my wife does not enjoy it but I still take 5 minutes a month to go over net worth, cash flow, spending, and investment strategy. It works and is quick). I believe that finances should be part of the everyday talk, but if that’s not possible, aim for at least once a month.
Understanding what you have to give up- The three components of investments: Safety, Growth, and Liquidity
An introduction to the difference between assets such as stocks, bonds, real estate, commodities, etc. The author brakes down short, medium and long-term money buckets providing the reader with a good analogy for investing goals. This is also the first mention of annuities and permanent life insurance in the book.
The 5 questions you need to ask before you hire a financial advisor
The key point, make sure they are a fiduciary and have experience in what you need. The author does cover the more common certifications and titles of advisors which I found helpful.
Who needs a financial plan anyway?
Everyone. Enough said.
The basics of college planning
Good for those with young kids. Less useful for the near-retiree. Honestly, I just skimmed this chapter since my son is 3 but the author did go into detail about financial aid applications and FAFSA. A useful chapter for those grappling with high school kids.
Term vs. permanent life insurance decision
I will always say to just get term and avoid permanent life insurance. Here, however, the author makes some potential points for permanent life insurance. The key is to know what you are getting, the upfront costs, and the danger of trying to take out the money early. A lot of these permanent life insurance policies are really expensive up front.
The first steps to income planning- Budgeting
J Money at Budgets Are Sexy would be proud. This chapter goes over everything for putting up an expense tracking sheet to actual budgeting. Since I love tracking my net worth and expenses, so this chapter made me smile.
Annuity 101: Making sense of the chaos
All about annuities. I actually learned quite a bit about annuities from this chapter. For anyone considering it, this chapter simplifies the very complex nature of annuities and will give us the information to talk to a financial planner if we really want to buy an annuity. A must-read for anyone who is interested in learning more about annuities.
What do confident retirees have in common?
I really enjoyed this chapter. It discusses the habits to follow for a successful retirement and the importance of paying attention to your financial plan.
There you have it. For anyone who is trying to convince their parents or their college or post-college kids to learn about finances, this may be a good first read. For those already deep into DIY personal finance, it will be less useful.
Also published on Medium.