Book Review: 'Invest your way to financial freedom' by Ben Carlson and Robin Powell
Updated: Dec 27, 2022
'Invest your way to Financial Freedom' is a book aimed at helping people in their 20s and 30s start their investment journey with a simple and efficient framework to achieve financial freedom.
The two authors are well known and respected amongst the private investor and adviser communities alike, with Robin’s Evidence-Based Investor blog and Ben’s Animal Spirits podcast being on my reading/listening lists.
My goal while reading the book was to view it from the perspective of the 25-year-old me, as a private investor with little financial/investing knowledge. What would I have learnt from the book at the time?
The struggles the new generation of investors face
The book starts by painting a picture of the struggle that young people are potentially going to face compared to previous generations at their age. These challenges range from poor salary growth to inflated asset prices. However, this is countered partly by the low-cost investment products that weren’t available even as recently as 15 years ago.
Key topics for investing success
It then goes on to cover key topics, including:
The importance of starting investing early to take advantage of the power of compounding, rather than solely focusing on investment returns. These are vital points, and one only has to look at which funds frequently appear on the best buy tables (hint: they tend to be the ones run by 'star fund managers' with significant gains in recent years) to realise where the focus currently tends to be.
Striving to increase your earnings potential, enabling you to save more (rather than solely focusing on spending less).
Automating your savings and attempting to increase this savings level over time, for example, when you receive a pay rise.
Risk and returns are inextricably linked; you cannot have high returns without accepting some volatility along the way.
How much risk you need to take, are able to take and are willing to take (all three are subtly different!)
How challenging it is to pick 'winning' stocks, and how diversification, asset allocation and having a financial plan in place is far more important.
The importance of keeping costs low and the benefits of pound cost averaging.
Whether you might need a financial adviser and what to look for if you decide to work with one.
The importance of keeping things simple.
This book is written in a straightforward, easy to read style and doesn’t delve into the technicalities. This is far from a criticism – there are already several books on the market* that cater to readers ready to take a deeper dive.
It provides an excellent grounding that enables someone new to investing to make a solid start on their investing journey, including the 25-year-old me I mentioned at the beginning of the review!
* Tim Hale’s Smarter Investing is an excellent read for those looking for a deeper dive into investment topics.
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Noel Watson and the team at Pyrford Financial Planning are Independent Financial Advisers based in Weybridge, Surrey. We specialise in retirement planning and provide pension advice, investment advice and inheritance tax advice.
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Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Although best efforts are made to ensure all information is accurate, you should not rely on this blog for your personal situation or planning.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.