Top critical review
74 of 77 people found this helpful
OK, but with flaws
on March 29, 2004
Although the book is well written, there are several problems with the ideas presented in it. I'm very skeptical of the reviewers who gave it a glowing review. Although it's an exciting concept that you can be an automatic millionaire, once you look into it a little deeper (which I suspect none of the reviewers did, if indeed they are true reviewers), the outcome is not so rosy, and is based on certain assumptions.
One of the major problems with this book is the oft-repeated assumption that your investments will make 10%. In a time with historically low interest rates and a struggling economy, achieving a 10% return is not easy these days. Many of the numbers in the book (e.g. how much money you will have if you invest $5 a day for 35 years) are based on this rate of return.
Secondly, the author does not often reveal how he gets his magic numbers. He shows no formulas, yet lots of dollar figures and a few tables. How can the reader confirm the numbers he comes up with? I feel like I'm reading a scientific report, with no way to confirm the test results in my own lab!
Also, the term "automatic millionaire" only seems to apply to those who can save 10 to 20 percent of their pre-tax (gross) income. How many people can do that? Certainly not those who are living paycheque to paycheque, which many people are.
The author advocates saving 10 to 20 percent of your gross income , and THEN adding extra, regular payments to your mortgage to pay it off sooner. If you can afford to actually do both of these things, you are better off than most people. Secondly, this plan of attack is not such a clear cut solution; there are many financial experts who recommend that you should pay off this large debt first (and I've seen compelling, REPEATABLE calculations which support this method), and then start saving money when your mortgae is paid off early. If I followed the advice in this book, I'd still be paying my mortgage after I retired, which is a position NO ONE should be in.
My advice: if you want to read this book, balance the advice by reading other financial books which support the mortgage first theory (I'm not going to say which ones, lest anyone think I'm trying to promote a specific author).
I read the book in a day, made some notes, and returned it.