Book Review: The Wealthy Barber

I just finished reading this all-time Canadian bestseller, The Wealthy Barber,which I bought from Chapters around two weeks ago. I could not believe how fast I finished reading this book. It only took me two weeks to finish all ten chapters. I remember that sometimes I need more than a hour to just flip one page of the text books. With this book, I simply have problems putting it down.

The Wealthy Barber covers many financial planning topics, including Investment, Wills, Life Insurance, RRSP, Mortgage, and Income Tax. It is very understandable and entertaining financial planning book. It explains everything without intimidating charts and graphs and a series of lifeless numbers. After reading this book, you will find out a good financial planning is nothing but common sense.
I would like to quote some words from the book, which I think either very useful or entertaining.
In the chapters talking about basic financial planning, it says:
“Wealth beyond your wildest dreams is possible if you learn the golden secret: Invest ten percent of all you make for long-term growth” Now you know the famous ten percent rule.
Ever wondering why your personal budget never works while business budget always do? See below:
“a business only has to budget for needs. It’s in the best interest of the business to limit those needs as much as possible. An individual, on the other hand, must budget for both needs and wants. It is a rare person who can do that successfully because, for too many people, a want becomes a need”
Afraid of risk when investing and would rather to have all your money sitting in your bank account earning interest? The wealthy barber says:
“Be an owner not a loaner over the long run.If it were consistently more profitable for businesses and individuals to leave their money in the bank than to invest it in North American enterprises, we’d all be in big trouble.”
I could not help laughing when I read the following:
” A broker is someone who invests your money until it’s his.” Haha, I feel the financial advisor is no difference. So be your own financial advisor because nobody cares about your money more than you do.
Wants to time the market and think somebody might have the forecast power?
“As for consistently accurate short-term forecasts, there is no such animal”; “Patience is always one of the most valuable attributes in investing.”
What about real estates?
“With real estate, it’s a matter of timing. There is no dollar cost averaging here.” Know nothing about dollar cost averaging? You need to pick up the book right now.

OK, I could not quote more from the book. In fact, the above is less than 1/3 of the highlighted in the book I have. I actually know about most of the points in the book, but still I learnt something I never knew before, especially for the wills and insurances. I used to think that we all need life insurance when we get older. But the fact is actually opposite because we should be self-insured already when we are old. It is the time when we are young that we need life insurance.(If you are single and have no dependents, you don’t need insurance.)
So if you know nothing about ten-percent rule, dollar cost averaging, when and how much life insurance you need, how to use income split technique to lower your tax bill, so on and so forth, you need to read this book. You will be glad you did.