Review of Building Wealth: A Beginner’s Guide to Securing Your Financial Future

In my top 10 list of personal finance lists, the first link takes you to a list of 30 free personal finance eBooks. I had the pleasure of reading the first eBook, Building Wealth: A Beginner’s Guide to Securing Your Financial Future by the Federal Reserve Bank of Dallas.

What I liked

This is one of the best beginner’s guide I have seen in years. I usually go straight for Dummies books when I am in new territory; but for the price, this one definitely trumps Personal Finance For Dummies (which I thought was pretty good).

It touches the full gamut of personal finance topics including the definition of wealth, budgeting, how to save and invest, how to take control of debt, how to protect your wealth, and it ends with a great glossary of financial terms. Although it covers a wide range of personal finance topics, it does a good job of going over all the important details - i.e., it covers all the major investment and insurance types.

The book was very easy to read, got some really nice examples, and make even the more complex concepts easy to understand. If this book is taught to every high school seniors, I think we would eliminate a lot of problems.

What I didn’t like

I am not much of a budgeting person, so I think that particular section was a bit overboard. Another piece of advice I didn’t care much for was “Seek advice from personnel at your bank or other trained financial experts”. The last time my dad was at Chase, they convinced him to invest in FKINX with 4.36% sales load without fully explaining the basics of mutual fund investment to him — so much for advice from personnel at the bank. Well, at least I got to give my dad credit for trying, and I love him for his courage.

The surprises

In the eBook, there were a couple of noteworthy goodies:

• Individual Development Accounts or IDAs are basically matched savings accounts that enable low-income American families to save, build assets, and enter the financial mainstream — similar to how many companies provide match for 401k savings. How cool is that?
• The Rule of 72 - I thought this was neat. The idea is you can figure out how long it will take to double your investment by dividing 72 by the investment’s expected rate of return. For example, if you invested $1,000 in the stock market where the average return is 11%, you should have $2,000 in 72/11, or 6.5 years. You can also do the reverse and divide 72 by the number of years to see what how fast your investment must grow. Neat!

If you have time, download a copy and enjoy.