J.C.’s Money Blog

This completes my three part book review of Wealth without Risk by Charles J. Givens. Here is Part I about personal finance strategies ,and here is Part II about cutting your tax bill.

Part III is about investing, and it starts off very optimistically with Chapter 26,”The secrets of powerful investing”, with three major investment objectives:

1. 15% safe investment return
2. No commissions
3. No taxes

Ok, Charles, you have my attention, although with a healthy dose of skepticism. Givens lists what he says are the ten best investments:

Investment		Strategy	Average Yearly Return
1	Asset Management Checking Account	Debit Card	8-14%
2	No-load mutual funds	Money Movement	15-20%
3	Mutual fund margain account	Leverage	25%
4	IRA/Keogh	Self-directed accounts	25%
5	Your own home	Leverage and personal use	20%
6	Employer’s retirement	Money Movement payroll deducted	15%
7	Self-directed annuities	Money Movement	25%
8	Discounted mortgages	Guaranteed interest tax deferral	30%
9	Liened property sales	High government-guaranteed interest and leverage	20%
10	Residentional real estate	Leverage and tax shelter	30%

And I was happy to get 3.5% from ING Direct on my savings account! Let’s read on to see if there is any substance to this chart.

Chapter 26 concludes without giving much concrete advice but gives some motivation on making your money work for you, or better yet, getting other people’s money to work for you.

Chapter 27 is about the ten biggest investment mistakes. Strategy #273 “KEEP YOUR MONEY OUT OF VACANT LAND” makes sense. If you buy vacant land, then you have to pay your interest on the loan and property taxes. Your asset has a negative cash-flow, so don’t do it.

Strategy #276 “STAY AWAY FROM INDIVIDUAL STOCKS AND BOND”, Givens says its too risky and you have to pay commissions, when you could instead buy no load mutual funds. I think this advice is a bit outdated, since brokerage fees have come way down, making buying stocks cheaper and therefore diversification through individual stocks much cheaper. Plus index funds are generally better than mutual funds, but index funds were either nonexistent or extremely obscure back when Givens wrote this book.

Strategy #278 “DON’T INVEST IN INFLATION HEDGES SUCH AS PRECIOUS METALS”. I hate the idea of investing in a chunk of metal and not using it to produce anything for humanity. Investing in a chunk of metal does nothing for anyone, but investing in companies creates products and services, as well as jobs.

Givens argues that one hundred years ago an ounce of gold bought a man’s suit, and now that same ounce of gold still is about as much as a man’s suit.

This is also the opposite advice than Robert Kiyosaki gives, so it must be good!

Strategy #280 hits close to home with me “NEVER USE A COMMISSIONED FINANCIAL SALESMAN AS A FINANCIAL ADVISER”. Right out of high school I used the savings from my summer job to buy $500 worth of shares in a mutual fund and also set up a monthly $25 share purchasing plan from the “financial adviser” at my local bank. I watched the price of my fund daily and noticed that the price of my mutual fund closely followed the major market indices. If the Dow Jones Industrial Average was up 1.5% on the day, my fund went up 1.3%. If the Dow was down 1.5%, my fund was down 1.8%. I realized early on that my financial adviser hadn’t pick a winner for me, she had picked a winner for herself. She knew exactly which fund to sell me as soon as I walked in the door, and I’m sure there was definitely some correlation between her commission and that choice, because there was certainly no correlation with past or future performance!

Since those first bitter experiences, I have avoided “financial advisers” and mutual funds whenever I can, instead going with low cost index funds and individual stocks from a discount brokerage. Unfortunately my 401k is my biggest investment, and my dumb ex-employer chose a company that gives me a tiny selection of bad mutual funds to choose from. All of which have underperformed my SPY holdings, and all of which have much higher fees. Argh. Mutual funds. I despise them and commissioned financial advisers.

Just think about it. If the financial adviser really knew how to invest money, then they wouldn’t be talking to you now, would they? I’ll never make that mistake again.

An interesting idea that I have never heard before is Strategy #285 “STORE 20% OF ONE YEAR’S INCOME AS ATTITUDE MONEY.” Givens says to make this your first priority, even leaving bills unpaid until this 20% is built up, and then deciding not to ever touch the money, no matter what. Something about having the money available and not using it is suppose to positively impact your attitude.

Technically and mathematically this doesn’t make sense, but it goes along with what other modern financial gurus are saying, that you should build up an emergency fund before attacking your debt, or aggressively saving for retirement. I think this probably sound advice, since personal finance, especially in getting started, is about psychology more than anything else.

I can’t stand the feeling of living paycheck to paycheck, and I would certainly never have quit my job, had I not spent the 3 years prior saving about 30% of my income, building up closer to 90% attitude money.

Next Givens goes into his bold claims that anyone can average 20% a year returns with no risk by following his trademarked money movement strategy, which is essentially as follows:

There are two major conditions

1. The prime rate is below 9.5%
2. The prime rate is above 9.5%

If the prime rate is below 9.5%, you should invest in stocks (he says through mutual funds, now I’m sure he’d say low cost index funds).

Under situation two, you must be a bit more careful, you have to look at the direction that interest rates are going. If interest rates are falling, invest in bond funds, if interest rates are rising, invest in money market funds. Click on the thumbnail here to see a chart of what he is talking about.

It has been a long time since interest rates have been near 9.5%, which may be why I have never considered bonds or money market funds as serious investments. Givens says this 9.5% actually changes over time based on market conditions, and you can subscribe to his newsletter to be kept up to date on the current value this threshold. I’m very curious where he would set it today.

Givens finishes the book was topics about buying mortgages and properties with tax liens. These aren’t topics that really interest me, so I just skimmed through them.

I must say Givens book is worth reading. He puts 357 strategies in black and white. While many are somewhat redundant, they are never ambiguous. The advice that Givens gives seems generally solid, and it is always very concrete.

The only real problem with the book is that it is not very motivating to me. I don’t feel energized to change anything fundamental in my finances, but I will think much more carefully about auto insurance once I buy a car, and I will spend a lot more time on my taxes next year. I already find myself thinking about my expenses and whether I can deduct them, so in that regard this book has made an impact.

I give this book a 6/10, because it was a pretty dry read and the advice seems like it doesn’t always apply to current market conditions, yet it did have a positive impact overall.

You can buy it from Amazon here:

Or better yet, check it out from your local library!