Robin Powell (The Evidence-Based Investor) and Ben Carlson (A Wealth of Common Sense) are two personal finance content creators who need no introduction. As such, I eagerly took up the opportunity to review their soon-to-be released literary lovechild “Invest Your Way To Financial Freedom; A Simple Guide To Everything You Need To Know”.
Disclaimer: I receive no financial incentive for this review.
The book is pitched at UK-based twenty- and thirty-year olds hoping to achieve financial independence, a demographic into which I fall. The guide is also entry-level, so I did my best to put aside my existing knowledge, viewpoints and biases in order to read it in the guise of a wide-eyed investing newcomer.
With regards to the subtitle of the work, it is a misnomer.
The book is undoubtedly a simple guide. It’s easy-to-read, largely jargon-free and does well to steer clear of dense examples. I’d argue, however, it doesn’t tell you ‘everything’ you need to know. It lays a solid foundation for sure, touching on core financial concepts. All the personal finance tropes are there:
Pay yourself first. No reward without risk. Diversification is the only free lunch in investing. Time in the market not timing the market. The best portfolio is the one that allows you to sleep at night. The best investment strategy is the one you’ll stick with. Money is a means to an end, not an end in and of itself.
Yet the information rarely leaves the realm of that broad base. This is no bad thing – the unadorned overview should allow the interested novice to pursue the avenues of inquiry they feel most appropriate. No, the book does not tell you everything, but provides an excellent series of pillars on which to build your financial future.
Other than a slightly jarring step-up in financial speak at the beginning of the chapter “What To Invest In“, the rest of the book does well to create a smooth journey through saving and investing principles. It beats the passive investing drum, appropriately so given its evidence-based motif.
Overall it is suitably deplete of investment analysis. Naturally equities are top billing in the worked examples, with bonds cast in a supporting role. There is, however, only passing mention of other asset classes and few specific examples of investing in X or Y. The authors prescribe principles, not portfolios.
What stood out for me was the strong theme of that oft-overlooked aspect of wealth-growing; behaviour. The book features sage advice on investing behaviour, including that of the financial celebrity A-team: Buffet, Munger, Graham, Bogle et al. I particularly enjoyed the notion of mental compounding; stacking up the mental victories to provide positive, psychological momentum.
This is pertinent for those thinking about making their first foray into investing. The ‘capital at risk’ warnings that are found around every corner on the route to investing can be utterly dissuasive. I know, having avoided it for many years due to the fear of certain bankruptcy. Carlson and Powell do well to counteract this with a simple message: start as small as you like, but just get started. Their pithy recommendation to “get out of your own way” encapsulates perfectly the behavioural side of personal finance.
I would therefore suggest that both titular aspects of the book are incorrect. “Behave Your Way To Financial Freedom” would be a more apt title in my opinion, albeit one that mayn’t sell as well.
The best of a good bunch
The use of an evidence base, rather than mere opinion, to inform the reader resonates strongly with my own approach to my blog (and my investment practice). In the chapter “Treat Your Savings Like A Netflix Subscription” the exploration of finding the ‘quality of life’ vs. ‘quantity of money’ balance chimes with my feelings on the matter too.
The authors allude to an unfortunate side-effect of the growing availability of investment products – complexity – and counteract it well with axiomatic financial principles. Indeed, the book served as a good reminder of key concepts which, if you’re exploring the depths of the investing warren, can become obscured or forgotten.
In their list of personal finance commandments, I think there’s one that’s more pertinent than all of the rest: talk about money more often. The lack of financial education at school, combined with the British taboo on discussing monetary matters, can lead to an information vacuum. That space is ripe to be filled with the empty, baseless advice of shills, charlatans and ‘finfluencers’. Everyone beginning to explore their financial self could benefit from filling said void with the truths found in this simple guide instead.