Saturday 9 July 2022

Review and Summary of “Just Keep Buying” by Nick Maggiulli [Part 1]

[This is a 2 part summary on a book I recently read, I have some main points and elaborations from the book and wrote more on my perspective, do give the book a read if you are just starting out as I found really useful]

I read a book recently and found it brought me back to the basics of investing and why I started investing. This book is a good refresher for experienced investors in this volatile market and a great starter pack for beginners.

There are definitely some chapters that Singaporeans can skip, those about the Roth 401k otherwise most of the chapters are pretty informative and explains why time in the market beats timing the market and of course, there might be instances otherwise.

If you like to know more in-depth on the pointers below, do give it a read but I like to bring up some of the important highlights which Nick has also emphasized on his last chapter. I will then provide some of my insights, for more in-depth explanation on the pointers, do read the book as I didn’t cover every point mentioned in the book.

  1. Saving is for the poor, investing is for the rich.
    As you start saving, your capital grows and investing helps to grow it although there is a chance for you to lose your money. Saving is a huge step towards handling your finances. Of course, if your income and savings are very much sufficient, saving alone could be sufficient.

  2. Focus on income, not your spending.
    I think this has been mentioned by many as they worked to build up their main income sources first or a business or side hustle could help add income. Building up your income whether on your main income or side hustle helps in the long term as you would have more to work with.

  3. Use the 2X rule to eliminate spending guilt

    Remember when spending to also invest the same amount into income-producing assets. This will ensure that you don’t spend frivolously.

  4. Save at least 50% of your future raises and bonuses

    Having a little lifestyle inflation if you have a raise or bonuses is all right, just remember to save at least 50% of that raise or bonus that you are getting.

  5. Debt isn’t good or bad, it depends on how you use it.

    I am sure you know this, the rich uses debt as a way to never touch their own money and use the debt to produce more income. Of course, the interest rate of the debt is important and making sure that you have the capability of paying it back is important as well.

  6. When saving for a big purchase, use cash

    Liquidity for upcoming purchases in 3-5 years is important to ensure that you can settle the bills on time and usually in the short term, investing your money is more volatile and you will usually need it invested for a longer period to see good returns. Imagine that you need the money for a down payment or for a wedding, it is best to keep it in cash or explore capital guaranteed vehicles like the Singapore Savings Bond.

  7. Only buy a home when the time is right

    Having your own personal space is nice and during the pandemic, many millennials realised that working from home was not conducive as there might not be sufficient space or that your parents might not be accustomed to you working at home. There were a number of millenials who move out by considering renting a place with their friends or a co-living space to have their own personal space.

    Renting is a great way to gauge your expenses and whether you are ready to buy your own home, if you find yourself struggling to make rental payments or your expenses > pay-check, you might have to adjust according. As buying a property will be a huge financial decision, down-payments, monthly mortgage payments as well as renovations and furniture, there is a huge financial commitment once you buy a home so careful thought needs to be put into it. 

    I do have a part 2 that I am working on and will be sharing it in the next few days.  

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