Masterson, a self-made millionaire, puts forth a logical approach for building wealth. He believes that a person, who is willing to put in the effort and time, can amass wealth in a period of 7 to 15 years. I think that timing is a bit optimistic, but even if it takes 20 to 25 years, the end result is still the same - financial independence, more freedom and tranquility. Masterson believes one's primary goal is to accumulate enough capital to generate passive income to pay for life's necessities.
This 271-page book is divided into only six detailed chapters. Each one explains one of the six steps to achieving wealth, which are:
1. Face the facts - you won't get rich saving 10% or more in your pension plan or getting measly salary increases.
2. Plan to become wealthy - This is occurs one step at a time and requires planning.
3. Develop specific wealthy habits - work hard, good a what they do, are extraordinary savers, pay themselves first
4. Radically increase your income - to the tune of 25% to 150%
5. Get rich while you sleep - by receiving passive income
6. Retire early - to live the lifestyle you want
Masterson provides specific examples of each of his six steps, as well as personal experiences and appropriate stories. It all seems very real and makes a lot of sense. He mentions that an individual has to make getting rich a priority and be willing to focus his/her energies on building wealth. He also covers the need to have a detailed short-term and long-term written action plan with specific goals.
The author suggests that everyone choose specific lifetime goals; calculate their retirement income needs based upon an analysis of assets and liabilities, and lifestyle requirements. He then recommends that individuals prepare wealth building goals, health goals, personal relationship goals, and personal growth and development goals. These goals should be set for daily, weekly, and monthly timeframes. He is a strong believer in time management and suggests managing time in 15-minute increments so that multiple goals can be worked on during the day.
Masterson believes that real estate can provide significant income and spends time covering how to invest in real estate and what the income should look like. Although he does mention investing in the stock market, he only invests 2% of his money in it. He is reluctant to plunk down a chunk of his money in stocks because they are too risky for him. Obviously, looking back the stock market's devastation during 2000-2002 and the real estate market's appreciation during that time period, his advice seems right on the mark.
He feels the stock market is a very difficult place to make money, and that investors should tread lightly there. For those who invest, he strongly urges them to cut losses at a specific level (25% for him), and use stop loss orders and trailing stops to protect profits. He does not recommend investing in the market unless you have at least $100,000 to invest.
He is a strong believer in investing a sizable portion of income in side businesses and local real estate to build wealth over time. He prefers investing in income generating real estate, buying rental properties, and buying fixed income investments - holding bonds to maturity to avoid any principal losses due to rising interest rates.
Overall, Masterson does a masterful job of explaining the steps necessary to accrue wealth and enjoy life. For those who believe that investing in the stock market is a critical element in the process, as I do, I recommend a newly published book by Paul Merriman titled "Live it Up without Outliving Your Money" which provides a conservative way to build a highly diversified portfolio that has outperformed the market with less risk.