Billed as an essential guide for anyone serious about financial or retirement planning, this book smashed sales records while selling over a million copies worldwide. First published in 1987 it is now in its 24th edition highlighting how the wisdom it contains still rings true to this day. Making Money Made Simple contains the essential guide to money investment, borrowing and personal finance planning. Although written for the Australian and originally New Zealand market, the principles it contains are relevant to every person who wants to make more money regardless of where they live.
This book is recommended to anyone serious about learning how to become financially independent, retire early or develop passive income from an investment portfolio. It’s any easy read with investment concepts broken down into simple, practical advice mostly devoid of jargon.
Re-reading and reviewing this book has a very personal aspect to it for me. I read the original and subsequently established a business with the original co-author. The business was founded on the principles in this book and created wealth for many, many clients. For me personally, it was and is the cornerstone of my own investment habits and, as I close in on retirement myself, has provided the foundation for my own retirement – one that will be more comfortable now than if I hadn’t read it.
Price (est only): Kindle edition $8 Paperback $36.99
(subject to change without notice)
Best Place to Buy: Amazon
International Service: Yes
My Rating: 95 / 100
Who Does This Suit?
For me this book was the basis of my education as a financial planner and investment adviser. The principles and guidelines it contains are still a great primer for any budding professional advising on financial or retirement planning. Originally written for the Australian and New Zealand market, some examples are more relevant to those countries but the principles and anecdotes are relevant worldwide. This book is recommended to anyone serious about learning how to become financially independent, retire early or develop passive income from an investment portfolio.
Noel is a long time student, commentator and author about financial planning and investment matters. Coming from an accounting background he was a director of Whittaker Macnaught (which closed in 2013) and has had numerous articles published in the Sydney Morning Herald and has authored 22 books. In addition to Making Money Made simple and it’s sequel Making More Money he coauthored the very successful “The Way to Wealth in Great Britain in the 1990s” with James Mackay.
What’s in It?
The book is a comprehensive walk through of the consideration you need to think about to become financially free. As well as key concepts like the difference between risk and volatility, asset allocation and general budgeting there are specific chapters providing introductory guidance on share markets, buying your own home and credit ratings and borrowing. Specific types of niche investments are also covered such as gold, options, managed funds, futures and superannuation.
Probably my favorite sections deal with specific life changing events and their financial implications. These sections are:
- Letter to a New Parent
- Letter to a School Leaver
- Letter to an Engaged Couple
- Letter to a Recent Sole Parent
All of them provide solid advice and a path to a better financial situation if only they were followed – as Noel points out in another chapter only about 8% of people “Make It Financially”.
What makes this book stand out is the down to earth advice it contains. Noel has the knack of distilling quite complex specialist advice into simple concepts anyone can understand.
A good example is the principle of “paying yourself first”. This discusses the fact that if you and yours only save what is left at the end of your pay cycle then you’ll save nothing because we all pretty much spend everything we have per pay. If however you’ve set an investment goal of say $100 per pay then if you take it out first – pay yourself first – then you’ll manage the family budget with what’s left but you will have paid that regular investment and be on the way to your investment portfolio.
I also like the “Rule of 72”. This is a simple measure of how long it will take to double your money based on the expected rate of return. So if your investment is returning 10% then divide 10 into 72 and you get 7.2. The rule says it will take 7.2 years to double your money for a 10% return. A simple, somewhat rough and ready measure but a great way of looking at potential investments relative to each other for their relative risk.
In the chapter “Earning Is Not Saving” an American survey is quoted which asked “How much do you need to live comfortably?” Nearly all respondent said about 10%. Just think about that for a bit. We all have different incomes but everyone is looking for about 10% more – from the relatively poor to the very well off. So nearly everyone has trouble living on what they earn.
“It is in our nature to spend right up to our earnings, irrespective of what those earnings are.”
And Noel’s insight:
“Becoming financially well off in NOT a matter of earning more. …. The secret is very simple.
It’s a matter of managing your money better.”
A classic example of the way this book addresses a seemingly complex problem affecting, it would seem, most people into a pithy, simple and quite blinding statement of the obvious. Just so you know, this was in Chapter Two and the rest of the book deals with a number of ways that you can actually manage your money better.
As I said at the start, I bought and applied the principles in the first edition of this book. When I saw that over 20 years later it was published as 24th Anniversary Edition I was a bit skeptical as to whether it had stood the rest of time. But for four bucks I thought what have I got to lose? My faith was justified and I have no hesitation in recommending this book to anyone wanting to learn a bit more about how to earn more income and once you have, what to do with it.
I hope you like this review and I’d be interested in your thoughts. If you have a comment or a question please leave it below. If you know somebody who might benefit from reading this book then please share this review with them using the social media buttons on this page.