How to Read and Profit From Wealth-Building Books
“Reading is a huge effort for many people, a bore for others, and, believe it or not, many people prefer watching TV.” – Hugh Mackay
As you may know, the two books I put out this year – Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire and Automatic Wealth for Grads… and Anyone Else Just Starting Out – made Amazon’s 10-best list of finance and investing books for 2006. That made me feel good. Really good. And the news came at a good time, because I have been thinking about how to write better books that sell well and deliver on their promises.
In my experience as a reader and writer, I’ve come up with some ideas about how to evaluate the different types of wealth-building books and how to go about reading them.
There are basically five types:
- Investment Books. Usually written by stock market gurus, these books assume that the reader wants to get wealthy by investing in stocks. They usually present an innovative or time-honored strategy for increasing performance. Example: Dan Denning’s The Bull Hunter.
- Academic Studies. These books, usually written by researchers (like Thomas Stanley’s The Millionaire Next Door), describe wealthy people, what they do, and how they became wealthy. My book, Seven Years to Seven Figures, might be said to fall into this category.
- Debt-to-Wealth Books. Typically written by financial planners, these books encourage and guide people in financial trouble to get control of their personal finances. Example: Suze Orman’s books.
- Scrimp-and-Save Books. Written by professional authors, these books show ordinary people how they can take advantage of the “miracle of compound interest” by investing wisely over a long period of time. Example: David Bach’s The Automatic Millionaire and my book, Automatic Wealth for Grads.
- I-Got-Rich-You-Can-Too Books. Written by successful businesspeople, these books tend to focus on the usual ways people get rich: entrepreneurship and real estate. Example: Donald Trump’s books and my book, Automatic Wealth: The Six Steps to Financial Independence .
To save you time and money, here are some recommendations about how and when to read these books.
- Investment Books. Read the best of these until you find an investment strategy that you can believe in. Then stick with that strategy. If you want, you can stop reading investment books after that. Studies show that consistency in investing is a more important indicator of success than the strategy itself.
- Academic Studies. Read these books for motivation – to remind you that if you want to become wealthy you must do what wealthy people do: work hard and save.
- Debt-to-Wealth Books. If you are in debt and out of control, read these books. At one level, they all have the same advice – but each author has his/her own particular way of dispensing it. Keep reading these until you get out of debt and have developed basic wealth-building habits.
- Scrimp-and-Save Books. Read these books for personal finance strategies if you have plenty of time (i.e., 30 years or more) to achieve your financial goals. Because they are based on compound interest – and compound interest doesn’t give you any traction for 30-plus years – they won’t satisfy you if you want to become wealthy relatively quickly.
- I-Got-Rich-You-Can-Too Books. Read these books if you want to get rich. Don’t be disappointed to “discover” the same old stuff: that the only two ways to get rich fast are through entrepreneurship and real estate. Why? Because that’s the way it is. (Actually, there’s another way, which critics of my books keep missing: intra-preneurship – getting rich as an employee.) Read these books for motivation and for specific real estate and business-building tips. Keep reading them till you succeed.
Aside from limiting your reading to books that are likely to help you, another thing you can do to become a better financial/wealth-building reader is establish realistic expectations of what a book can do for you. The best way to develop realistic expectations is to be aware of the most common complaints about financial/wealth-building books and understand when they are legitimate gripes and when they are simply excuses for the complainer’s inaction.
In my experience, the four most common complaints are (1) that a book is irrelevant (it wasn’t written for the particular reader), (2) that it offers advice the reader has heard before, (3) that the advice is impractical (or it doesn’t make sense for a particular reader), and (4) that the author’s motives are suspect (i.e., that he is trying – gasp! – to make money from writing his book, rather than writing it purely from the goodness of his heart).
My books have been subject to all of these complaints. If you want to know how I answer my critics, check out my blog.
Reading about wealth building is a very important part of the wealth-building process. Almost every successful businessperson and investor that I know reads avidly. Many wealthy individuals, including Donald Trump and Warren Buffett, are prolific readers.
What I’m hoping you’ll do – in addition to the other resolutions you’ve already made for 2007 – is make a commitment not only to read more but to read only the business and wealth-building books that will help you the most. And when you do that, keep these two suggestions in mind:
- If you want to get something out of your reading, you have to put something into it. If you read with the expectation of finding something valuable – an idea, a technique, a tip, or an inspiring story – you will.
- Read strategically. A scrimp-and-save book will provide different ideas and recommendations than a debt-to-wealth book. Know what to expect from any book you pick up, and don’t waste your time or energy trying to dig out something you’re unlikely to find.
If you follow this advice, you’ll waste less time reading books that aren’t going to help you achieve your financial goals, and you’ll get more out of the books you do read. And keep this in mind: If you get one good idea out of a book – even a bad book – it can repay you a thousand times over for the time you invested in it.[Ed. Note: If you haven’t already read them, get your copies of the two Michael Masterson books that were included on Amazon’s list of the Top 10 Finance and Investing Books of 2006: Seven Years to Seven Figures and Automatic Wealth for Grads.] [Ed. Note: Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]