1. Retirement Planning Done Right
We may be a little biased about this, but one of our top suggestions is a book written by our advisory staff here at Summit. Retirement Planning Done Right: Work with a Fiduciary | Analyze Your Portfolio | Strategies to Reduce Taxes is a very high-level overview of the type of business we run and the financial planning we perform. This book is excellent for those venturing into their finances for the first time as it explains the critical focus areas, such as Risk Tolerance, Social Security, Accumulation vs. Distribution Stages, and much more.
We also spend some time detailing key attributes you should look for in a financial advisor before you begin to work with one. We understand we may not be the best fit for everyone, but we still believe we hold values that are important to serving clients appropriately, and these should be a requirement to some extent for every advisor.
2. The Millionaire Next Door
One of the most widely applicable reads we suggest is The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, written by Thomas Stanley. This book is excellent for everyone, regardless of the situation, since it preaches smart budgeting and aggressive saving. The content within this book can be eye-opening as it reveals some truths about what the “average” millionaire is like and how they may not match our expectations.
It is possible to achieve millionaire status if you routinely and aggressively set aside savings for retirement and set strict boundaries on your budget, even if you only have a modest income. It is common for high-income earners to become subject to “Lifestyle Inflation” as they begin buying larger homes, more cars, and even that expensive boat. This type of spending can be the biggest hurdle to reaching millionaire status, and this book does a beautiful job illustrating this concept. In comparing the tortoise versus the hare, sometimes the boring route can be the most successful.
3. Rich Dad Poor Dad
For those who want to be more active with their investment and money management, we recommend reading Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! written by Robert Kiyosaki. One of the best features of this book is that the author illustrates important lessons by recalling various personal life experiences. As a result, it reads more like a story than it does an educational resource. The concepts in the book revolve around finding intelligent ways to grow your assets and having your money work for you. Yes, stocks and bonds are excellent investments over the long term, but they may not have the highest return potential, especially for someone willing to put in some extra work on their end.
On the other hand, whether it is acquiring a real estate portfolio or starting a small business, investments might generate a high return and a consistent income stream. This book also broadly highlights issues in the education system and society as it explains assets and liabilities, which leads to the revelation that your home may not be the significant investment you thought it was. Also, parents must obtain a financial education to pass it on to their kids if the school system does not.
4. Thinking Fast and Slow
Our final recommendation for this blog is a book that focuses on decision-making broadly with aspects that certainly apply to personal finances. Thinking Fast and Slow, written by Daniel Kahneman, is a great resource that applies to many aspects of life whenever a decision needs to be made. Daniel Kahneman is a world-renowned psychologist and is also a Nobel Prize winner.
This book encompasses many lessons he has learned throughout his life and helps readers identify why they think the way they do. He explains the differences between the quick reactions of System 1 and the slower deliberate decisions of System 2, in addition to a handful of biases that affect how we derive our choices. This book is excellent for those who are more analytical and want to make sure they decide clearly. Emotions can be a considerable hurdle regarding investments, and this resource is the perfect tool to ensure you are making the most well-informed, non-biased decision at that time.
Speak With a Trusted Advisor
If you have any questions about Behavioral Finance, taxes, your individual investment portfolio, retirement planning, our 401(k)-recommendation service, or anything else in general, please call our office at (586) 226-2100. Please feel free to forward this commentary to a friend, family member, or co-worker. If you have had any changes to your income, job, family, health insurance, risk tolerance, or your overall financial situation, please give us a call so we can discuss it.
We hope you learned something today. If you have any feedback or suggestions, we would love to hear them.
Best Regards,
Zachary A. Bachner, CFP®
with contributions from Robert Wink, Kenneth Wink, and James Wink.
If you found this article helpful, consider reading:
- Different Types of Debt
- Understanding Behavioral Finance
- Tax Filing Status Options Explained
- Acceleration and Deceleration for Investors
Sources:
- https://www.amazon.com/gp/product/B0B9FQBDSX/ref=ppx_yo_dt_b_asin_title_o00_s00?ie=UTF8&psc=1
- https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555/ref=sr_1_1?crid=14N39AFZAMB4K&keywords=thinking+fast+and+slow&qid=1678379603&s=books&sprefix=thinking+fast+and+slow%2Cstripbooks%2C105&sr=1-1
- https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474/ref=sr_1_1?crid=22SK71RI4XBF4&keywords=millionaire+next+door&qid=1678379619&s=books&sprefix=millionarie+next+doo%2Cstripbooks%2C95&sr=1-1
- https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1612681131/ref=sr_1_1?keywords=rich+dad+poor+dad&qid=1678379627&s=books&sprefix=rich+dad%2Cstripbooks%2C110&sr=1-1
- https://summitfc.net/behavioral-finance/