Book review: I Will Teach you to Be Rich
A contrarian take on personal finance
Although I Will Teach You to Be Rich (henceforth referred to as “Be Rich”) has an eyebrow-raising title, the content between the covers is rich and useful. To summarize the book in a sentence: Be Rich is about creating money management systems to help you to (force you to) grow wealth over time.
The Richest Man in Babylon is one of my favorite financial books of all time, and Be Rich picks up where Babylon leaves off. If I can learn a single lesson from a book I consider it a good use of my time. In this case I hit a home run, I learned three things!
- Roth IRA — I’ve never had a 9 to 5 job or been employed anywhere with a retirement plan. Mind you I’ve always saved money for retirement, but I failed to do it efficiently. Be Rich exposed me to the Roth IRA, an investment vehicle that lets me grow my investment position over time and then monetize the gains without paying taxes. I finished the book a week ago and I’ve already set up an account and funded it.
- Retirement vs emergency savings — For the last ~8 years I’ve methodically saved 15% of every paycheck. Good times or bad, doesn’t matter I’m saving dat money. However, Be Rich forced me to examine what I’m saving for. I realized that I’m putting all of that 15% savings into my long term investment account, but I’m not saving an additional sum for emergencies. Henceforth I’m going to save an additional 5% of every paycheck in a savings account to use for emergencies/large purchases.
- It’s easy to set up an online savings account — This is hardly life changing information, but I still found it useful. I’m in the process of completely renovating my money systems (even before I read the book) and I was questioning how I could keep some cash in a separate account. Turns out, it’s really simple to set up an online checking account. I had no idea.
Be Rich is about saving and managing your money consciously. It’s about creating a system that lets you spend your loot on what matters, while ruthlessly cutting back on crap that you don’t care about.
There is an entire chapter of the book devoted to passive investing, where Ramit argues that you can’t beat the markets so don’t even try. This message is contradictory to everything the Unhedged Capitalist stands for but hey, it’s just one chapter out of many.
I might argue that the last 40 years of passive index fund returns have possibly been a historical aberration and that active managers will outperform indexes in the turbulent years to come… But that’s a topic for tomorrow’s article, stay tuned!
Summations
This book is engaging, the topics are interesting and the advice is not even remotely close to the “pack your own lunch” and “make coffee at home” bullshit that so many books get lost in. While this isn’t like reading Chuck Palahniuk, Ramit Sethi is an edgy writer with an endearing tendency towards non-political correctness that I love. I’m thrilled to have read this book.
Every Sunday I publish a recap of all the investing articles and YouTube videos that have really made me think… Here’s 👉 the latest edition.
