75 of 78 people found the following review helpful
J. E. Nelson
- Published on Amazon.com
This book was required reading as part of a Master's course on Personal Financial Planning. The book is an excellent beginners guide to financial planning. The format of the book can either be pleasing and interesting or wordy and rather boring, depending on the background of the reader.
Unlike many financial planning books, this book has a plot. The plot revolves around 3 people, the main character (Dave, a teacher), his self-employed, wealthy sister (Cathy, Landscape Business owner), and their friend (Tom, a plant worker). Dave goes looking for financial advice and after asking his father, he is pointed to Roy, the town barber. The 4 of them have monthly meetings as they get their hair cut, where Roy teaches them a tidbit on financial planning at each meeting. The topics covered include The Ten Percent Solution (fun money for retirement), Wills and Life Insurance, Planning for Retirement, Real Estate Investment, Saving, and Taxes.
The book is somewhat like giving an appetizer to a person who has not eaten in a week, it helps, but it is not enough. The book does cover many excellent points, such as compound interest, one of the most important concepts in saving. The idea of a Ten Percent Fund is outstanding and is something I would not have thought of. The book then does an admirable job explaining why a person should have a will. The book begins to trail off with the life insurance section. This is the first point in the book where the reader should be calculating numbers. However, there are no worksheets, poor and insufficient examples, several suggestions, and no equations to make your own calculations; in short, if I was not aware of how to calculate how much life insurance to get, I think I would have still been clueless after this chapter. The planning for retirement section does an admirable job explaining various retirement savings vehicles, but there is little or no mention on figuring out how much a person should save. Once again, there are no worksheets or equations to walk a person though calculating or estimating how much they should be saving for retirement. The chapters on real estate and taxes were informative and were definitely worth reading. The chapter on saving was ho hum; it covered some points, but was mostly common sense.
I think the book could have benefited from a chapter dedicated to changing your investment types as the date of a goal approaches, such as retirement. The information on asset allocation is spread throughout the entire book. I also think the book could also greatly benefit from some detailed examples, especially on the life insurance sections and retirement sections.
The book starts out making it sound like life could be good if a person could save 10% and invest is wisely. By the end of the book, the ten percent fund is separate from retirement savings and saving for your children's education. Though no numbers are used after introducing the ten percent fund, I estimate a person needs to save and invest 20% of their income to save for play money, retirement, and children's college education. I think most people would have difficulties saving that much.
The book is an excellent beginning point in the world of financial planning. I feel the book discusses the items most people would be interested in; however, I think the book could benefit from more detail. The plot makes the reading interesting, but slow and inconvenient to locate information in past chapters. I think the book is definitely worth reading for people who are inexperienced in planning their finances for the future, especially young people just getting out into the world. The earlier saving starts, the less painful it is.