Review: Two For The Money

2 forColored in bright orange and subtitled The Sensible Plan For Making It All Work, this book is really effective at getting your attention on the bookshelf, but when I picked it up and leafed through it, my initial reaction was that it was just another personal finance book, no different than a truckload of others.

The “gimmick” here is that it’s written by Jonathan and David Murray, identical twins who happen to be investment advisors (hence the cheeky Two For The Money title). They use this throughout the book, injecting short blog-like bits where the two of them debate a financial issue – these were among the most interesting parts of the book, actually.

Does this book really offer anything that can’t be found elsewhere, or is there something that the Murray boys offer that can’t really be found somewhere else? Let’s dig in and find out.

A Deeper Look At Two For The Money

The book is laid out in an attention-grabbing fashion – it conveys a nice sense of being easy to read and easy to dig into, something that’s important for personal finance books, as they can often get quite boring. As I mentioned above, the chapters are broken up by brief articles that come off almost like blog posts; about half of them are entitled Double Take and feature a debate on a particular point between Jonathan and David, usually with one taking a conservative perspective and the other one touting aggressiveness, and the rest are entitled Tools for the Money and merely provide more detail on a specific issue. In short, this book is well-designed for browsing – if that’s how you absorb a book, it’s a big thumbs up for Two For The Money.

Chapter 1 – How Much Is Enough?
The book opens with defining goals, something dear to my own life. It goes through the major financial targets that most of us have, like retirement and our children’s college education, and then looks at how much we realistically want and expect from these things before finally putting a real price tag on them.

The perspective here on retirement was pretty refreshing. Rather than just spouting off a number that indicates how much you’ll “need” in retirement, it instead walks through several potential retirement scenarios – different standards of living in retirement – and basically uses that model to really figure up how much you’ll need. According to that model, I won’t need all that much – most of my interests in retirement are rather inexpensive ones, mostly revolving around grandchildren, reading, and volunteer work.

Chapter 2 – Getting Organized
Most of the advice from this chapter has already been discussed here on The Simple Dollar; it boils down to a need to organize and store your personal finance documents. Many people overlook this, but I find myself often looking back at earlier statements and bills when piecing together questions, particularly in terms of my spending habits.

The Murrays probably don’t realize it, but they actually advocate an approach vaguely similar to GTD for dealing with all of your paperwork – process it, deal with the quick stuff, and file away the statements that may be needed for later reference. It’s much better than the chaos system of management I’ve seen in many places, including my own kitchen table on occasion.

Chapter 3 – Build a Budget, Find the Free Money, and Get Out of Debt
Here’s the “basics of personal finance” chapter that’s almost traditional in books like these, and, like usual, it’s not given quite enough detail to be useful. The basics of setting up a budget, cutting out some of the big wastes in your monthly spending, getting rid of your credit cards, and so on are here, but they’re covered rather quickly. There are much better books for looking at personal money management – if this is the information you’re looking for, look at a book like the excellent All Your Worth (read my review).

Having said that, they do advocate the “debt snowball” technique, which I’m a big fan of. For those of you unaware, basically it means taking as much as you can of your monthly income and directly applying it to debt repayment, starting with the smallest debt and working up to the largest. Why a snowball? Each time you get a debt paid off, that minimum payment is added to your “snowball,” which then rolls downhill onto your next debt. Eventually, your snowball is huge and hammering away at your biggest debt (usually your mortgage). Best of all, when it’s over, you already know how to manage your money well and suddenly you have a big chunk of change each month to invest.

Chapter 4 – Saving More Money Starting Now!
This chapter is a twenty page compression of the material in David Bach’s The Automatic Millionaire (read my review). Basically, the idea is that you need to cut down on your silly expenditures (Bach’s “latte factor”) and start saving that money instead, preferably in an automatic fashion so you don’t even have to think about it.

It seems almost stupidly simple – stop buying dumb stuff and save the money instead – yet it’s actually much more difficult than it seems or else everyone would be doing it. The average savings rate in the United States right now is actually negative (meaning the average American literally spends more than he or she earns), which means that just by cutting down a little and actually building savings, you’re in better shape than the average American. Think about that – it’s a powerful motivator when you consider how many Americans right now are just swimming in debt, clutching to their Gucci handbags, hoping that Visa and Mastercard don’t eat them alive.

Chapter 5 – How to Get Rich the Prudent Way
This chapter is loaded with basic investment advice, which boils down to seven rules:

1. Let time be your ally. Focus on at least five to ten years out, and grow your wealth steadily through compounding.

2. Maintain realistic expectations. From 1928 to 2005, the S&P 500 has gained an average of about 10 percent annually, and experts often use that figure to calculate long term returns. For your planning purposes, be more conservative. Use 8 percent to be safe.

3. Diversify across asset classes. Smart investors hold a mix of stocks, bonds, and commodities. The mix may vary depending on your age and temperament, but the basic principle of diversification holds true today.

4. Hire a professional financial advisor you trust. Let him or her worry about the market.

5. Keep your costs down. Look for investments with low fees, and don’t do a lot of trading, which can generate higher commissions and taxes.

6. Invest regularly. Take advantage of dollar cost averaging to maximize returns.

7. Don’t worry too much about the market.

Good rules, all of them, and the chapter merely expands on each one a bit.

Chapter 6 – Twins’ Tips for Successful Investing
This chapter is literally a list of seventeen tips on various investment specifics, each one a page or two in length. The investment advice is generally pretty conservative: don’t chase specific sectors, be a value investor, use dollar cost averaging to your advantage, the best way to double your money is to double your investment, and so on.

Although I agree with most of their advice, I don’t agree that most people need an investment professional to help them out. I realize that the Murrays are actually investment professionals and it would be counterintuitive for them to suggest that they’re unnecessary, but I think John Bogle’s philosophy, spelled out in The Little Book of Common Sense Investing (see my review), is pretty spot-on – just stick with low-cost index funds, balance things yourself to minimize risk, and you’ll be fine.

Chapter 7 – The New Retirement
Here, the Murrays focus directly on retirement. Not planning for retirement, but the actual issues facing people when they reach their late sixties and early seventies and are actually looking at retiring. Basically, the book says that if you’re happy, keep working and building for the future by investing in disability insurance and so on, but if you’re ready to hang it up, build up an emergency fund before you take that leap.

The advice here is pretty specific to baby boomers and not really applicable to what my retirement situation will be like, so I largely skimmed this chapter. I don’t plan on retiring for a very long time, and even then, it will be more of a “retirement” – I’m not wired to sit around all day without being mentally or physically productive in some way.

Chapter 8 – The Heart of the Matter: Finance for Couples
Again, this chapter is a compression of the great material spelled out in another well-known personal finance book – this time around, it’s David Bach’s Smart Couples Finish Rich (read my review). Basically, the best thing you can do to keep a healthy financial situation with your partner is communicate. Talk about money, even if it seems uncomfortable or boring. If you don’t have a grip on your money – and a grip on where you both stand with money – life will present a lot of financial and personal challenges for you.

I did quite like the mention of an emergency file that you both prepare so that, in the event of the demise of one member of the couple, the other has everything under control. My wife and I have one of these, but it is going to need a significant revision soon because I need to mention several aspects of The Simple Dollar in it – so let that be a lesson to you, if you make one, don’t let it sit there and get all cobwebbed and out of date.

Chapter 9 – Kids and Money
For me, as a newer parent, this chapter was particularly interesting, as it covered the gamut of issues from introducing your child to basic money topics to teaching your adolescent about responsibility and earning money to helping out your young adult children with college. The advice is largely solid and is mostly focused on making sure that your children leave your care without a big financial burden and a good understanding of how money works.

In general, the brothers seem to believe strongly in what I like to call “self-reliance with a safety net;” don’t just hand them things, but give them the opportunity to work for things and discover themselves in the process. For example, they debate on the concept of having a teenager work – one of the twins was strongly in favor of having a teenager find a job, while the other one said that they should also explore options like unpaid internships. Either way, your child is learning something valuable about himself or herself – and about the world.

Chapter 10 – Taking Care of Your Aging Parents
The last meaty chapter in the book focuses on taking care of your parents as they reach their advanced years. The biggest portion of the chapter strongly encourages you to have a deep financial talk with your parents about their estate and discuss with them openly how they want their estate handled in their final years and after their passing so that all of their ducks are in a row.

There’s also significant attention paid to long term care insurance – a very nice four page primer near the end of the book on the topic. If this is something you’re beginning to think about with your parents, you might want to pick up this book at your local bookstore and give that bit a read – it’s on page 294.

Chapter 11 – It’s About Your Life
The book wraps up with a fluffy farewell chapter, five pages that just conclude with the astute point that it’s your life and the decisions you make now will have echoes down the road.

Buy or Don’t Buy?

In short, if you’ve never read a general personal finance book, this one is an enjoyable place to start. Two For The Money was a rather enjoyable read with very solid advice on a wide array of topics. Unfortunately, this area of “general personal finance” books is quite crowded and while this book is a very good one, if you’ve already read a general personal finance book or three, this one won’t really bring anything new to the table.

Two For The Money is the thirty-third of fifty-two books in The Simple Dollar’s series 52 Personal Finance Books in 52 Weeks.

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