I Will Teach You to Be Rich: No Guilt. No Excuses. No B.S. Just a 6-Week Program That Works.

by Ramit Sethi

In investing, fees are your enemy.

actively managed funds will too often fail to beat or match the market.

Imagine one day you woke up and you had enough money in your accounts to never work again. In other words, your investments were generating so much money that your money was actually producing more money than your salary.

remember that money is just a small part of a Rich Life.

Your investment plan is more important than your actual investments.

Your asset allocation is actually one of the most important decisions you’ll make in life—it’s

“Once you’ve won the game, there’s no reason to take unnecessary risk.”

your biggest danger isn’t having a portfolio that’s too risky. It’s being lazy and overwhelmed and not doing any investing at all.

Active management can’t compete with passive management, which takes us to index funds,

1975, John Bogle, the founder of Vanguard, introduced the world’s first index fund.

Index funds are the financial equivalent of “If you can’t beat ’em, join ’em.”

Some companies call them “target date” funds, while others call them “target retirement” or “lifecycle” funds. They’re all the same thing.

30 percent—Domestic equities: US stock funds, including small-, mid-, and large-cap stocks 15 percent—Developed-world international equities: funds from developed foreign countries, including the United Kingdom, Germany, and France 5 percent—Emerging-market equities: funds from developing foreign countries, such as China, India, and Brazil. These are riskier than developed-world equities, so don’t go off buying these to fill 95 percent of your portfolio. 20 percent—Real estate investment trusts: also known as REITs. REITs invest in mortgages and residential and commercial real estate, both domestically and internationally. 15 percent—Government bonds: fixed-interest US securities, which provide predictable income and balance risk in your portfolio. As an asset class, bonds generally return less than stocks. 15 percent—Treasury inflation-protected securities: also known as TIPS, these treasury notes protect against inflation. Eventually you’ll want to own these, but they’d be the last ones I’d get after investing in all the better-returning options first.

past performance is no guarantee of future results.

if you have a lump sum of money, most of the time you’ll get better returns by investing it all at once.

If you feel this way, sure, use a small part of your portfolio for “high risk” investing—but treat it as fun money, not as money you need.

10 percent of my portfolio for fun money, which includes particular stocks I like, know, and use

invest a little in whatever you want.

Decide whether you want the simple investment options of a target date fund or the increased control (and complexity) of index funds.

Use the Swensen model as a basic template and prioritize which funds you’ll buy today and which you’ll get later.

You do not want to live in the spreadsheet. Life is more than tweaking your asset allocation and running Monte Carlo simulations on your investments.

The best way to rebalance is to plow more money into the other areas until your asset allocation is back on track.

You can rebalance by selling the outperforming equities and plowing the money into other areas to bring the allocation back under control. I hate selling, because it involves trading fees, paperwork, and “thinking,” so I don’t recommend this.

one of your funds has lost money, that will also knock your asset allocation out of whack. In this case, you can pause the other funds and add money to the loser until it returns to where it should be in your portfolio.

Invest in retirement accounts and hold your investments for the long term.

When you’re young, there are only three reasons to sell an investment: You need the money for an emergency, you made a terrible investment and it’s consistently underperforming the market, or you’ve achieved your specific goal for investing.

Be mindful of how you discuss money and who you discuss it with.) By mastering your money, you’re disrupting the normal relationship pattern you’ve had with others, which makes them uncomfortable and causes them to react in odd ways. Don’t take it personally.

Have a repertoire of your accomplishments and aptitudes at your fingertips that you can include in your responses to commonly asked questions.

Negotiating tactic: Your line is “Let’s talk about total comp,”

Negotiating tactic: The phrase to use here is “We’re pretty close . . . Now let’s see how we can make this work.”

Negotiating tactic: Smile.

pick a reliable car, maintain it well, and drive it for as long as humanly possible. Yes, that means you need to drive it for more than ten years, because it’s only once you finish the payments that the real savings start.

There are four steps to buying a car: Budgeting, Picking a Car, Negotiating Like an Indian, and Maintaining Your Car.

Don’t be afraid to walk out if the dealer tries to change the finance terms on you at the last minute. This is a common trick.

believe that part of getting rich is giving back to the community that helped you flourish.