November 15th, 2008 — Book Review
Douglas Andrew’s book targets the baby boomer generation and tries to convince them that it is not too late to become a millionaire and avoid living on soup kitchen handouts to survive retirement. That’s a pretty tall order and a lot of authors have failed at this exact same premise. While Andrew’s book is well written and contains some good advice, there is just not enough here to make it stand out from the other books in this overcrowded field.
The first part of the book is dedicated to the art of financial planning and if you can wade through it to get to the parts you really want to read – bravo. Personally, he spent far too much time covering this area and it started to feel a bit like filler halfway through. With a catchy title, most readers are going to want the goods pretty quickly and forcing them to sit through half a book of financial planning advice is not a good idea if you want them to stay connected.
He constantly stresses frugality and the importance of not consuming. Well – good luck with that. We all have to consume, and if we didn’t the economy would implode. I’m certainly not saying we should all throw caution to the wind and spend every last dime, but over-frugality doesn’t make much sense either. It’s the happy medium that counts when it comes to managing your finances, not the extremes.
Once he does finally get to the point, you’re treated to advice that you should rip your money out of its nice safe little IRA and throw it into life insurance investments. It doesn’t take long to wonder whether the author has a vested interest in this since the tone of the book shifts to a full on sales pitch. While life insurance investments can be useful, it’s certainly not a good idea to go blow your entire IRA on them. Another disturbing point is the fact that he acknowledges that tax laws for life insurance investments “may” be changing and he “thinks” that if you invest now, you’ll be grandfathered in.
I’m sorry but “think” is not enough to get me to cash in my IRA, thank you very much. While he does include some figures to illustrate his points, in my opinion, this is simply far too much to ask of any reader. In addition, while he did cover the importance of annuities, and other safe investments, there was no attention paid to the importance of having more than one source of income.
Baby boomers are being phased out rapidly from companies all across the country and many are finding that financial ruin is looming after being laid off. There is also a lack of advice on how to leverage debt (which is vital for readers that may not have plush savings accounts) to create more income for retirement.
The book failed on many fronts, and honestly, I cannot recommend it to anyone.
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July 3rd, 2008 — Book Review, Debt, Leverage, Money
Marian Snow’s book had a lot of promise. First, it discusses equity harvesting and how to get the maximum amount of equity out of your home without being taxed on it. Second, it discusses how to use that money to make more money. Sounds great on the surface, but this book failed to deliver and ended up being a major disappointment. The subtitle: How to Safely Leverage the Equity Trapped in Your Home and Transform It Into a Constant Flow of Wealth and Security seems a bit macabre now, in the wake of the housing crisis and one wonders how many people are regretting that they ever picked this book up.
Let’s start with first things first. The author is encouraging people to “free” all that nice equity in their homes and put it into something that will actually earn money instead of depreciate. Sounds good – but can be risky if you don’t pick the right investments. Quite honestly, leveraging the roof over your head is never a solid idea, especially if you only have one stream of income. Lose your job – and poof – there goes your house. But, so far, so good with the book.
It’s the next part that lost me. The author wants readers to pull out their equity and invest it into this wonderful, magical tax-free fund that will reap huge rewards, and produce it’s own sunshine and lollipops. (Ok, maybe not the last two.) Keep reading and you’ll find out that this wonderful mythical fund is nothing more than life insurance. The book did provide an interesting study into a theory I’m developing however.
Books that encourage readers to harvest equity and place it into a magical fund usually wait until the absolute last second to reveal it’s nothing more than life insurance. Slap a different title on any one of them and you basically have the same book. That pretty much blew the whole premise for me from that point on. The main problem is that there simply isn’t enough of a return to warrant risking the equity in your home.
Whenever you’re using debt leverage to create a new stream of income, you’ve got to make sure that the return is going to be worth the risk. Given that tax laws could change at any time for insurance funds, this is a hair raising prospect that any smart home owner should avoid – at least for now.
There are dozens of other ways to leverage debt into multiple streams of income and they don’t include life insurance funds. While there is some benefit to investing in these funds, it’s never a good idea to go whole hog. You’ve got to diversify. Any fifth grader that sat through a basic course on financial planning would understand that.
Overall, I cannot recommend this book. It unfortunately gets thrown in the pile with the numerous other books that all promise big returns and end up selling you life insurance – sort to speak.
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