Wealth creation is hard to achieve, but not to understand. Some level of wealth is possible for everyone and wealth creation is a right if you choose to exercise it but you must understand the economics and politics of wealth. The economics is simple; the politics more subtle and individuals need to understand both and this book does just that. It deals with…how to improve your wealth, your financial independence and your quality of life…Words: 910
Lorimer Wilson, Managing Editor of munKNEE.com, has slightly edited (…) below the Preface and Overview from the book WEALTH IF YOU WANT IT on wealth creation by “Monty Pelerin” (a pseudonym) of EconomicNoise.com.
Pelerin has a doctorate degree in Finance from Syracuse University, an MBA from the University of Chicago and an undergraduate degree in economics from Duke University. He can be reached at [email protected] if you have any questions (put HELP in the subject line to attract my attention). Permission is granted to copy this post for non-commercial purposes with proper attribution.
The book has two parts:
- Part One, “The Basics”, assumes no financial knowledge and has ten (10) chapters grouped into two classifications:
- Savings and Wealth Basics and
- Investing Basics and
- Part Two, “The Advanced”, assumes a limited knowledge of investing and has twelve (12) chapters:
- Current Economic & Investing Conditions
- The Philosophy & Rationale for the Development of the Lifetime Portfolio, a model simple to use but sophisticated in results which has been designed for dangerous markets and unsophisticated users. It is simple to understand and manage.
- The model recommends actions and provides a reasonable (and easily adjusted) tradeoff between risk and return. You determine your comfort zone regarding risk.
- Each quarter, the model supplies recommendations based on market conditions. These are specific asset selections. You have total control over your portfolio. You may accept or ignore its recommendations.
- The model only contains four assets! The time commitment for users should be a few hours per year! It accommodates passive or aggressive investing styles.
Part One: An Introduction
As mentioned above, Part One is for novices; little knowledge about financial
matters is necessary. The material is basic. It deals with topics like the necessity of saving and how savings precede wealth. Savings is the off-ramp to independence but independence does not mean “rich”, however, It means a level of flexibility, freedom and security that makes general dependence on others unnecessary.
- Chapter 1, “Is Wealth Discouraged?“, deals with dependence. The material in Chapter 1, is especially important for those who are not yet savers/wealth creators and deals with what appear to be deliberate political barriers placed in front of the less affluent that encourage dependence. If you fear you may be a candidate for this fate, read the entire chapter. For you, it might be the most important one in the book. If that is not the case, then move directly to Chapter 2. Read Chapter 1 here.
- Chapters 2 through 6 deal with savings describing how to establish a savings plan and a wealth goal. Each reader should design a custom plan for his situation and needs. To achieve independence, it is imperative that you understand fully the material in Chapters 1 through 6. Here are links to Chapter 2 (“What is Wealth?”); Chapter 3 (“Requirements to Succeed”); Chapter 4 (“Where am I Headed?”); Chapter 5 (“Road Map to Wealth”) and Chapter 6 (“Surprise Millionaires”).
- Chapters 7 through 10 deal with fundamentals pertaining to the stock market. I review historical risk and return patterns. These chapters are useful if you intend to proceed to the second part of the book.
Part Two: An Introduction
Part One dealt with the importance of savings and how savings is the
seed corn for wealth. Part Two shifts emphasis. It deals with the economics of wealth creation and the serious risks presented in today’s investing arena.
As mentioned above, Part Two, “The Advanced”, assumes a limited knowledge of investing and has twelve (12) chapters which provide an understanding of the extreme dangers in current markets.
- Chapters 11 through 16 present the author’s interpretation of the economic environment and the risks prevalent. For those who understand the dangers ahead, a reading of Chapter 16 may be all you need before moving on to Chapter 17.
- Chapters 17 and 18 explain the dangers to investing in dangerous times and how to do avoid them.
- Chapters 19 to 22 present the development of The Lifetime Portfolio which is my answer to investing in such dangerous times. It is a flexible and agile investing model enabling users to tailor their particular risk preferences. It is a unique, easy-to-use and sophisticated approach to investing that requires only four assets to be managed. Trades, when necessary, occur quarterly. The model recommends the actions to be taken. Readers wishing to begin there are encouraged to do so.
- Chapter 23, Appendices.
The book is free (go here for a free download) and without gimmicks. Milton Friedman aside, it is a “free lunch.” Wealth creation is hard to achieve, but not to understand. Some level of wealth is possible for everyone. Wealth creation is a right if you choose to exercise it.
Enjoy! Let me hear of your successes or failures. If I can help either with suggestions or answering questions, contact me at [email protected] (Put HELP in the subject line to attract my attention.)
Good luck. Happy and prosperous investing.
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