The Richest Man In Babylon – Book Review

I recently finished reading the book Richest Man in Babylon, a book by George S Clason. There were some interesting parts in the book, and I thought it was a decent read for someone who isnt aware of their personal finances and struggles with it. I realize that there are plenty of folks out there who struggle with grasping the concept of saving and investing and fall into the traps of overspending their hard earned money. However, I just couldn’t figure out why this book is so popular and recommended by one and all. Don’t get me wrong, I thought there was some value in the concepts outlined, but anyone who spends a little bit of time thinking about personal finance can figure these concepts out and there are plenty of other resources available in these days, that can educate starters more easily. The book is also elaborate with quasi-repetitive stories, which I thought was unnecessary and could’ve been wrapped in less than half the pages dedicated to the stories.

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2014 Review

The year is almost over and what better time for a 2014 review. Its time to reflect on how things progressed and look back at the goals and what was achieved and missed during the year. In addition, I present reviews for my investments and the blog.

1. Goals Review

  1. Earn $4,000 in annual passive income Achieved!
    • We were able to crush this goal and are close to achieving $5K in passive income. The final number will be posted on the blog in the coming days. We achieved this goal in early November.
  2. Buy a house Achieved!
    • After a lot of debating on when and where to buy, we are now proud home owners. We bought our house in May and moved into it in July.
  3. Re-balance portfolio with my wife’s portfolio integrated Failed!
    • This is a work item that we haven’t been able to complete and hope to finish it in the new year.
  4. Sell all my positions in mutual funds and cut down on the fees Partially Achieved!
    • I sold all my mutual funds in April, but my wife’s account continues to own some expensive mutual funds.
  5. Read and review more books Partially Achieved!
    • This is one work item I am not pleased with. Even though I read and reviewed some interesting books, there are a lot more books that I started and haven’t finished. I hope to clean up my act in 2015 and beyond.
  6. Write atleast 6 premium articles for Seeking Alpha Achieved!

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Windfall – Book Review

Windfall from McKenzie Funk is a fantastic new book that I have been reading over the past couple of weeks – and it has been awe-inspiring and an eye-opener on a lot of subjects. This book is a must-read for all investors to understand the business of climate change. The book is unique in that Funk travels to dozens of countries following the money, exploring and reporting from the frontlines.
About the Author:
McKenzie Funk is an award-winning magazine writer and a founding member of the global journalism cooperative Deca. His stories appear in Harper’s, National Geographic, Rolling Stone, Outside, and The New York Times. Website: www.mckenziefunk.com

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Fed Up – Movie Review

Last Friday, my wife and I went out to watch the new health documentary Fed Up. The main theme of the movie is about the obesity epidemic in the US, how the US government has been unable to fight the corporations effectively and takes a head-on fight against sugar. The movie is produced and narrated by Katie Couric, featuring interviews from high profilers such as Bill Clinton, Michael Pollan etc.
Fed Up – The Trailer
The argument that the movie producers are trying to make is that working out isn’t enough to lose weight; and the scales are tipped against an individual’s favor when considering the amount of junk food available everywhere. Kids from a very young age are targeted in advertising and are hooked onto the legal drug – sugar. Parallels are drawn between the current junk food industry and the cigarette industry from the yesteryears. The movie producers and the speakers in the documentary call for a change in food habits and for the government to act accordingly.

While nothing new to health nuts such as my wife and I, this movie is probably an eye-opener for plenty of people, who have no idea where their food comes from and how the un-nutritional and harmful processed food generally is. We felt that the movie got very repetitive, but we could see why the producers had to do that in order to get the message across. So, that was our short takeaway from the movie, and with that out of the way, lets see why I am writing about a health documentary on this blog.

In addition to watching a health-related documentary, my investor brain was kicking in, trying to find opportunities in the trends identified. The movie focuses on the processed food industry such as McDonalds (MCD), Coca Cola (KO), PepsiCo (PEP), Kellogg (K) etc, which are the darlings of the investor world. However, what the movie misses to address is how the US government is also enabling this by subsidizing the agricultural sector to produce mass levels of corn syrup, which finds its way into a majority of the products. There was one statement from Bill Clinton that touched on this issue when he states “I don’t think high-fructose corn syrup is a good use of corn”, but seemed to have been missed by the producers as a point of emphasis.
I am not yet invested in the processed food manufacturing industry, but hold stocks in agricultural giant – Archer Daniels Midland (ADM), which receives plenty of subsidies from the US government. In addition to receiving subsidies from the government to produce increased levels of corn for food, corn is also used as an energy source in the production of ethanol and bio-fuel.

The movie simply states some facts such as the rise in obesity, heart diseases etc. One “fact” that was stated in the movie that caught me by surprise was that we now have a lowered life expectancy than the previous generation, although my follow-up research does not seem to suggest any such thing (Source: World Bank data). The advancements we’ve achieved in the pharmaceutical industry (lots of investment opportunities there) and the medical procedures have elongated our life expectancy for sure. How good is the quality of life, is a completely other question.
The increased levels of unhealthy living leading up to obesity, diabetes and heart diseases are probably the best opportunity for investment – as I realized it a few years ago and started investing by initiating positions in companies such as Johnson & Johnson (JNJ) and Medtronic Inc (MDT). I also invested heavily over the last few years in a healthcare mutual fund which I recently sold after doubling my investment, but I still maintain the positions in JNJ and MDT and intend to add more to my positions in the future.

I recommend watching this movie for two reasons: (a) to educate yourself about healthy living and learn about the obesity epidemic in the US and (b) to identify and observe investment opportunities.
Full disclosure: Long ADM, JNJ and MDT. My full list of holdings can be found here.

Retire With Dividend Growth – Book Review

Retire With Dividend Growth: A Better Way is the second book from Dan Mac where he enlists the steps for the readers in order to ensure a good & comfortable retirement plan. Dan Mac runs the blog at Dividend Growth Stock Investing, and provides some great reading material on a regular basis.

Summary

The book starts off with presenting the case for dividend growth investing while pointing out some flaws in William Bengen’s 4% rule and why dividend growth investing is a better strategy. As readers of my blog know, I am a big fan of dividend growth stocks…maybe its confirmation bias, but I agree with the listings made by Dan Mac on why retiring on income produced by dividend growth stocks is better than other strategies. An excerpt from the book on the limitations:

• The biggest concern with the 4% rule is that you will run out of money when you most need it. You shouldn’t accept the possibility of running out of money when there is another strategy that can almost guarantee you never run out of money.

• Following the 4% rule requires you sell more of your investments when they are undervalued and sell less when they are overvalued. When investing, this is the exact opposite of what you want to be doing. There is a better way in which you will be making smarter investment decisions.

• If you want to leave an inheritance behind, the 4% rule reduces quite drastically the amount you will be able to pass on. Why work so hard your entire life creating a nest egg and then not be able to leave anything behind to your loved ones? There is another strategy that will have your family thanking the heavens that you were such a financially astute investor.

Why Read This Book?
Financial education and planning for your retirement is an important aspect of life that is missing from the education system. The onus is left on you, as an individual, to teach yourself on how to plan for the long term and build an investment portfolio to provide during the golden years of your lives. Books like the one in question are a great way for people to get introduced to the idea of long term planning and think about investments and take matter into their hands instead of hoping that the government would take care of their retirement via pensions.

This is an easy book to read and understand. The book also provides a chapter -by-chapter exercise to follow and work out the numbers for each reader’s case. The reader is walked-thru with the  whole planning process of determining estimates, creating shortlists of stocks and which metrics to use, account types, asset allocation with extra notes on a balanced portfolios, emergency funds, when to sell stocks etc. Dan Mac also importantly notes that the maintenance of the retirement plan involves minor adjustments as a life-long process. The book wraps up with steps to  take care of, when its time to retire – with a good discussion on tax planning for your sources of income; and managing the portfolio during retirement and passing on the fortune to your children.

Recommendation
For long term investors, I recommend this book as it provides with some good overview of investment strategies and things to keep in mind while building your portfolio. However, if you are a seasoned dividend growth investor, a lot of the information may come as something you are already familiar with. The book also takes a very education-oriented approach, so other dividend growth investors can learn a thing or two about how to educate others about dividend growth.

Retire With Dividend Growth: A Better Way is available on Amazon for $4.93. Click here to buy.

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