Tuesday, April 3

Getting Aggressive?

I flipped through a book at the library today which took me by surprise. (Sadly I didn't note down the author or title, but I will make an effort to find it again and add it to this post.) The author was advocating a highly aggressive approach to personal finance, suggesting that anyone who is willing to follow her advice can be a millionaire 3-5 years after they become free of consumer debt. Although I didn't read all the details and I didn't feel like I could buy in to her approach, there were a few interesting points that related to topics in my own finances:

  • "Entities" were a big part of her strategy. She figured that anyone who wanted to be wealthy needed to have an incorporated company (or several). Now, this was a U.S. book with different terminology, but I know from my own experience that the tax advantages of having an incorporated company are significant in Canada too.
  • Move capital out of places that it is stagnating. This included pulling equity out of the primary residence to invest it, which is something that I have often thought about. It also meant moving retirement funds into more flexible accounts that allow less traditional investments.
  • Start a business immediately in an area that you are already expert or experienced. Again, something that I have seen the benefit of, although I can't say whether my experience is typical.

Like I said, this is a very aggressive book, and would not be a comfortable approach for most people. In fact, it felt a bit irresponsible because the risk side of her suggestions seemed to be ignored (unless I missed it). She focuses very strongly on cash flow, which is an approach that I like. But it reminded me a bit of the Rich Dad guy - I read one of his books a few years ago, and it struck me as very simplified and optimistic.

Anyway, I wouldn't be recommending this book (even if I knew the title), but it is good to have the jolt to check and see if you are being too conservative (I usually am) and to remind you that risk and reward do go together....


mOOm said...

The author is Loral Langemeier. I blogged about one of her books.

the money diva said...

Thanks moom! I think you are correct, that sounds like the name.