Book of the Month -Simple Wealth, Inevitable Wealth

FACTS Book of the Month is, “Simple Wealth, Inevitable Wealth”, authored by financial veteran, Nick Murray. Murray makes a compelling argument that those who invest in other companies will find that equities are not one way to build and maintain wealth, it is the only way! He states that stocks are not risky, “not” owning them are. For example, is it worse losing part of your portfolio due to a bear market or outliving your assets due to inflation? Further, those who own equities (stocks, stock mutual funds, etc...) are to think of themselves as partial owners of the company. However, those who loan debt (bonds, CDs, etc…) need to think of themselves as debtors.

Murray points out that owners are rewarded more than loaners and that between 1926 and 2003 the real rates of return, including taxes were 6.1% and 0.9% for owners and loaners respectively. Murray further argues that having an advisor/coach that helps you set up your portfolio is the best way to stay the course and see the fruits of your labor. Case and point, “from 1984 through 2002...the average U.S. equity mutual fund produced an average annual return (with dividends reinvested) of 9.6%. During the same period, the average equity mutual fund investor earned an average annual return (again, with dividends reinvested) of 2.7%.” This was an easy and enjoyable book to read. In addition, if you are a skeptic about stocks, but have an open mind to learn a new perspective on them you will enjoy the book even more. Know the FACTS!