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BR 225: Simple wealth, Inevitable wealth by Nick Murray

Category: 2 – BUY it!* (All Categories are 1 – Read ASAP!, 2 – BUY it!, 3 – SHELF it, 4 – SOMEDAY it)

Comments: I am a fan of personal finance and investing books and enjoy reading one every year or so. For the most part, they serve as a nice reminder to me to be thoughtful about saving and investing. This book was particularly interesting because Nick Murray makes a strong case for working with a financial advisor. This is contrary to nearly every other famous investing books. Nick is biased by his own experience as a financial advisor and author of books for financial advisors of course. But, he is upfront about those biases. While it didn’t result in me engaging in an advisor, it inspired me to speak to one. While it was definitely not the right time, I might still end up taking his advice some day in the future. He also hammers home the point that ownership (via stocks) is the only route to wealth.

Top 3 Lessons:

  1. Most wealth is lost not by bad investments but by bad behavior. Fear has a greater grasp on human action than the impressive weight of historical evidence. And, there’s a financial advisor out there for you who is going to be worth every cent you pay (typically 1% of your investments) in terms of adding to your gains, avoiding weaknesses and saving time.
  2. Stocks are the only strategy for long term wealth. Once you adjust for inflation and taxes, bond return is near zero. The real long term return of equities is so much greater than that of bonds that holding bonds is irrational for the true wealth seeker – people fatally underestimate the risk of not holding stocks
  3. Ownership is the only route to wealth. The great long term financial risk isn’t the loss of principal but the erosion of purchasing power = money. Stocks increase in value and raise dividends at a much greater rate than inflation saps our purchasing power.

Book notes here.