The Automatic Millionaire By David Bach

What is The Automatic Millionaire?

The Automatic Millionaire takes advantage of the access created by technology, and combines it with age old wisdom to accumulate millions whilst earning a modest wage. Following are a few lessons from this book.

Lesson 1: Automate

The most important take away from this book is how incredibly easy our modern technological world has made it to automate saving a percentage of your income. Start by setting aside small amounts, even $5 dollars, into designated accounts each month, and gradually increase those amounts over time. The book tells a timeless story of a couple earning very modest wages, but over time, have accumulated enough (yes, they became millionaires) to allow them to retire as they chose.

You too can automatically transfer funding to your IRAs, brokerage accounts, bond purchases etc. Start small.

Lesson 2: Let Compounding Work For You

How does Warren Buffett make his money? He engages in Value Investing, which involves meticulously choosing a stock to invest in, and WAITING over a long period of time to cash in. In the Automatic Millionaire, David Bach suggests applying the same concept to Mutual Funds, etc. The key is to let COMPOUNDING of money work for you. The earlier you start, the better off you will be at retirement, or you may even be able to enjoy the possibility of early retirement.

Lesson 3: Debt & Leverage

The age old advise of staying away from debt, especially useless debt such as credit card debt, is reiterated in this book. When is it okay to take on debt? When you can leverage that debt! Such as with your home mortgage, where you make a relatively small down payment, and borrow the rest to purchase your home. This is actually one of the techniques mentioned by David Bach to get you into the millionaire stratosphere. Since home prices in the US have mostly gone up, his strategies will not only allow you get to outright own your home, but also to reap the benefits of capital gains . Today, there are many programs that provide favorable financing, such FHA Loans, to get you on the path of owning your home.

The Automatic Millionaire Book Review

The timeless information presented in this book is easy to understand, easy to setup, and if followed, WILL result in you becoming a millionaire. Other intriguing ideas presented in the book includes “paying yourself first”, and what that really entails, as well as “the Latte Effect.” This book is a must read if you would like to take control of your finances.