The Algebra of Wealth: a Simple Formula for Success by Scott Galloway
Let me just start by saying that I purchased this book with the intention of gifting it to my teenage daughter, and I read it first to see if it passes my BS detector. Not only has it passed, but I wish she studies it deeply, takes notes, and acts (lives) accordingly.
If you have young adults in your family, this is a must-read material to kickstart their successful life by instilling some basic rules for life. Go grab a copy of The Algebra of Wealth for them.
Scott Galloway aka Prof G, has a pretty straightforward no-BS writing style, so I assume the book will appeal to all the readers tired of academic blabling when it comes to such topics as building wealth.
Non-US folks should just skip and ignore the topics related to IRA (Individual Retirement Account) and study whatever the version is in your country.
The book distills tons of information about markets and wealth creation into four actionable principles and a formula: WEALTH = Focus + (Stoicism x Time x Diversification). Each of these are separate chapters supported with data, interesting stories, and almost zero BS.
Each chapter ends with a chapter review to make it easier to recall actionable points and actually do something. This makes it a fast and valuable read.
Here are some examples from the chapter reviews:
Train your habits. Identify behaviors you want to engage in and use the science of habit formation to make them instinctual.
Just do it. Beware of analysis paralysis. Don’t mistake planning for action. You will learn more and make more progress in your initial attempts and early mistakes than you will through theorizing.
Consciously direct your attention, time, and energy. Economic security is created over the long term, through sustained focus on the most productive opportunities.
Accept the necessity of hard work. Nearly all paths to wealth involve time at work, energy spent on work, and sacrifices elsewhere in our lives. Resenting that undermines your current focus and your long-term satisfaction.
Don't follow your passion. Follow your talent.
Focus on mastery; passion will follow. Sustained, rewarding passion is the product of hard work, not its cause.
Nurture your skill at communication. Across every career path, the ability to communicate is always a positive, and often essential. Read novels or watch movies you enjoy, learn how to display information visually, listen to how great presenters captivate their audience.
Sweat. The correlation between regular exercise and health, success, and happiness is undeniable. Make time for physical fitness and you will net more time in the end, thanks to higher productivity. Lift. Run. Move.
Invest in your partnership. The most important decision you can make is to partner with someone and go through life as a team, and your partner is the most important relationship you'll have. Marriage is an economic booster shot, but it requires effort and sustained attention.
Value your time above all other assets. Squander money, and you can earn it back. Squander time, and it's gone forever.
Appreciate the power of compound interest. A small return compounded over many years grows surprisingly large.
Be rationally obsessed with money. Maintain focused attention on your income, spending, and investments, without letting yourself become emotionally engaged.
Track your actual spending. If you only track one metric in your life, make it your spending. Not what you plan to spend or think you spent: the true dollars going out the door every day.
Make career choices based on culture as well as skills. It’s obvious that you want a job that suits your skill set, but it’s just as important that your workplace suits your personality. Work with people who get the best out of you.
Get to a city, go to the office. Your twenties and thirties are for learning the way of work, for pushing yourself, for expanding your network and your knowledge of the world. That means being around other people, the more the better.
Be loyal to people, not companies. Organizations are transitory arrangements with no moral compass or memory, and they will not be loyal to you.
Convert your income into capital. Capital is money put to work, creating value. Investing is providing capital in exchange for a share of that value. Wealth is achieved through investing, not income alone.
Invest mainly in passive, diversified, low-cost securities. Exchange-traded funds (ETFs) are the retail investor's best friend. They provide passive diversification and transparent risk.
Buy a home when it's the right time in your life. Real estate is the emperor of asset classes, and owning a home is the way most people get started. When it comes to fixed savings, an investment you get to live in is hard to beat, and can be the anchor of your portfolio. But an anchor is no good when you want to set sail. Home ownership is a consumption decision first, an investment decision second.
The Algebra of Wealth isn't just an interesting and super valuable reading material; it's filled with practical examples from the author's life and the mistakes that cost him money. Learning from his mistakes can save you a ton of trouble. An that, my friend, is why this book is a wonderful gift idea for someone you care about.