Automatic Wealth for Grads – Book Review #4

Be forewarned: Automatic Wealth for Grads is a terrible book.

In my previous book reviews, I’ve included an Amazon ‘widget’ that links directly to the book. I really don’t do this for the affiliate money — I’ve made in the order of pennies from Amazon which isn’t even worth the work required to install each widget. I like offering the convenience of a direct link to potential readers of a book (if you’re too lazy to grab it at the library, you might be too lazy to even Google it). The book that I’m reviewing today, Automatic Wealth for Grads, is so terrible that I don’t want you to read it. On Amazon it has a rating of over 80% which is ludicrous and, to me, smells of fake reviews. Thus I haven’t installed the Amazon widget. If you want to read this book, I’ll have no part in it.

My first turn-off was that the book’s author, Michael Masterson, is a cross between a door-to-door salesman and a carnival barker. He seems like the host you’d see on a “get rich quick” scheme infomercial. But I tried to keep an open mind. Just because a book’s preface makes me feel greasy doesn’t mean it’s devoid of any useful information. Then I got to page 17:

“Write down [your necessary annual income during retirement] on a piece of paper. Now take that number and multiply it by your projected ROI… When you multiply the [income] by the second number [ROI] you’ll come up with the amount of money you will need to have in savings in order for you to achieve financial independence.”

OK so I want to make $100,000 per year. My return-on-investment is 5%. 5% x $100,000 is $5,000. I only need to have five grand in the bank to retire!?

Oh, he actually should have said divide the desired income by the ROI. For a book that claims to be “…like getting your master’s in financial independence,” I was disappointed by the lack of rigor. It’s supposedly the hugely famous sequel to an even more hugely famous original book, written by a hugely famous self-made millionaire — and nobody could be bothered to check the only equation in chapter one? From here on in, any discerning reader will see the author’s self-infatuated, reality-be-damned hype for exactly what it is: unadulterated, self-serving bull.

The remainder of the book mulls through the standard fare of personal finance, such as compound interest, investing, and real estate — except that Michael Masterson gives very un-masterful advice on each topic.

Automatic Wealth harps about compound interest. I expect this from any personal finance book I pick up, so I had some tolerance going in. He exceeded it. The author’s projections become increasingly absurd. At first he assumes that investments will consistently earn 10%. That’s ridiculous to me, but I’m sure some financial advisors still hook schmucks with that number. Then he ratchets the rate up to 18% because, apparently, a person can consistently beat the stock market’s return by ten full percent (they just need the discipline to stick to a system, Masterson claims). Next, the return is 30%. Finally, he shows how a person can acquire the entire money supply of the G8 nations. It’s easy — you just need to earn 50% on the stock market every year. Why not? Beat Warren Buffett and retire with $100,000 in income for every $5,000 in assets. You just earned your masters in financial independence from Snake Oil University. By the way: Masterson wastes ten pages by filling them with charts showing how much money you’d earn at each insane compounded interest rate depending on how long you invest for.

He wastes a similarly ridiculous number of pages by filling them with charts projecting the income growth of new graduates. Suffice it to say, they’re as stupid as his assumptions about investment returns.

The book was published in the year 2006. You may recall that, at the time, America was near the precipice of its soon-to-implode housing bubble. Masterson advised – again, in 2006 – that recent graduates (many of whom were in debt) go out and leverage themselves into “good deals” in real estate. He claims that it’s easy to make a 25% return on investment properties — just use a 5-percent-down mortgage! Oh yeah, and don’t forget to flip houses. This book gave me chest pains.

Finally in Chapter 9, Living Rich Starting Tomorrow, our multi-millionaire (who – surprise – made his fortune in ‘direct sales’ which is a euphemism for scumbaggery) claims that striploin is the most tender and delicious type of steak — it’s the best cut in the world, he says. Umm… I believe that would be the tenderloin. Heck, give me a slice of top sirloin or ribeye and you can keep your New York strip. Mmmm, now I’m thinking of steak. There’s just no excuse for embarrassing yourself this badly. He fills some more pages regurgitating the cliched advice that we should write down goals, be cautiously optimistic, and live in the moment. Then, mercifully, his clichéd tome of stupid is over.

The Bottom Line

Don’t buy this book. Don’t borrow it from the library. Don’t read this book. If you see a copy, consider purchasing it to burn later, to save the next generation from the possibility of reading it. It’s not witty. It’s not interesting. It’s not even insightful. Michael Masterson is living proof that anybody with enough reckless confidence can get published. Upon further research, it appears that Masterson sells a scam-y ‘Make Six Figures Working from Home’ course. And operates under at least one other alias, “Mark Ford“.

I give Automatic Wealth for Grads a 0 / 10.