Book Review > Wealth Wisdom

The major topics covered are grandly titled “All you need to know about property investing”, “All you need to know about the share market”, and “All you need to know about contracts for difference”. The coverage of residential property investing is thorough, and similar to many other books on that subject. However, its coverage of the share market is poor, incomplete, and misleading, and of CFDs is dangerously simplistic. A further problem is that the selection criteria for the choice of CFDs are the same as for the share market. As the share selection criteria are suspect, using them with the huge leverage of CFDs should be frightening to an informed reader. It makes inspirational claims about the benefits of investing and provides a platform to promote the authors additional fee paying Master Classes, investment programs, courses, and advisory services. The reader is continually being encouraged by examples of the profits made by the author’s students.

The first part of the book covers the usual arguments for investing, although I am troubled at being told repeatedly how simple it is going to be. It covers assets, liabilities, and good/bad debt as per Robert Kiyosaki’s “Rich Dad, Poor Dad”, and short/long term goal setting. We wander into a bit of pop psychology when neurolinguistic programming is thrown in, and then get carried away by science when talking about raising the pH level in the body by 1 degree by meditation (pH range is between 0 and 14 and is not measured in degrees).

The need for financial education, saving to invest, having a strategy, and leverage are covered. The author says the holy trinity of wealth creation are wealth, growth and income, where wealth is the long term security of property, growth is value investing in the share market, and income is trading CFDs. We are told not to worry if we have no money, just trade CFDs to generate extra income, use it to buy some shares and when we have enough for a deposit, sell the shares and buy a house.

In the chapter on “How to create a wealth building property portfolio” he says it’s time to get really excited, and he does this by saying that with an 8% capital growth and 5% rental income you will double your money in 5.54 years. True if you ignore all the expenses such as agent fees, letting fees, vacancies, insurance, land tax, rates, maintenance and interest on the loan. He gives an example of putting a deposit of $40,000 on a $340,000 house, its price doubling and making a profit of $340,000, all in a bit over 5 years. Apart from these errors, I found the property chapters to be a good introduction for would be property investors.
Unfortunately, the information in the book rapidly deteriorates from this point on. The share market chapters exhort us to do as he says and we will be rich, but contain little useful information and many errors. He tells us to buy stock screening software (maybe he sells it?), when it’s available free at sites such as CommSec and Etrade.

He introduces the two chapters on CFD’s with the statement “..if you’re concerned that you don’t have the spare cash to start your growth strategy, don’t worry because I’m about to share with you the Rolls Royce of  income generation strategies”. As I have never traded CFD’s, I won’t comment further except to say that a broker acquaintance recently told me that he had strongly advised one of his well to do clients against trading CFD’s about two years ago. The client ignored the advice, attended a CFD trading course, started trading and lost $350,000, before he recently stopped.

In conclusion, a disappointing book that largely trivialises the hard work involved in serious investing. I would not recommend the book be given to family or friends for X’mas.

J Boucher is a member of the AIA.