Top critical review
Good for the novice, but a bit over-rated for anybody with experience
16 July 2018
Went with 3 stars in the end.
I would recommend the book to anyone who is new to investing and needs to ensure they will have a comfortable retirement. It provides good evidence for the merits of DIY investing vs holding cash and 'my property is my pension'. The sections on real (after inflation) returns and the power of compounding may seem obvious but the book provides a clear rationale for the beginner.
A few minor issues are ignored
- no mention of stamp duty or bid/offer spreads, impacting the charges for shares and investment trusts
- the advice to go with ISA vs pensions (SIPP) may not be right for higher rate tax payers in particular
The larger issues are
The keep it simple strategy should result in reasonable returns and a comfortable retirement, but the concept that the investor can stop working in their 30s or 40s is wholly unrealistic based on the diversified approach. I think getting results slightly better than global index is easily possible, but if you assume the hidden inflation of ~5% which the author suggests, the long term real returns wont be sufficient.
The author doesn't really make it clear what the ~10% cash element and ~30% commodity exposure is meant to achieve. Over the last 10 years, rebalancing the equity gains (annually) into cash & commodities would just dilute returns. Holding cash would be fine if any real advice on when to move in/out of equities was provided.
Given that 80% of spread betters lose money, I don't think any exposure is a good suggestion for the book's target audience. The more advanced section is really just a recommendation to read more articles and gain more experience - and not realistic for the audience.
So overall - a great book to share with your family/friends to get them started, and to allow everyone to take responsibility for their future. If you think it will let you give up the day job, I don't think so. Given the costs of financial advice and the number of good magazines/websites and low cost platform providers, going it alone is perfectly possible.