The Small Investor Book Club Update


For the SmallIvy Book Club we’re reading The Compound Effect by Darren Hardy this month.  At the end of the month I’ll write about my impressions and let everyone else write their’s.  If you’d like to join us you can get a copy by clicking on the book cover below.

The Compound Effect

One thing Hardy stresses in his book is that there are little choices (good and bad) that don’t seem to mean anything when we make them, but cause things to end up as they do in two, five, ten years or more.  I know this is definitely the case for gaining financial independence.  When my wife and I started “acting abnormal,” as Dave Ramsey would say (because normal people are broke), it definitely was a lonely journey with a lot of doubt.  All around us people were buying new cars every few years, going on expensive trips, and eating out almost constantly.  They were also buying big homes with big mortgages.  (This one particularly worried me since the leverage they were getting would mean they’d make a lot more on their expensive home than I would on my modest home if housing prices continued to rise as they had for a long time, but the housing crunch made me glad we had made the choice we did.)  Few of them were putting much money away for retirement or college savings accounts for their children, let alone investing money outside of their retirement accounts.

Meanwhile we were buying used cars with 80,000 miles on them for a few thousand dollars (and paying cash), eating most meals in, bringing lunches, and going on driving vacations where we’d stay and 2 star hotels.   We bought a modest home for which we put 20% down.  After a few years we refinanced from a 30-year to a 15-year loan and then paid that off in about 12 years.  It really didn’t seem like we were getting anywhere for a long time.

But then we were able to pay off our home early.  The stock market, after sitting idle for about 14 years between 1998 and 2012, finally started to pick up steam and cause our retirement accounts and taxable accounts to climb in value.  (Actually, there were times of great gains in those periods, but there were also two huge financial crises – the 1999 dot com bust and the 2008 housing crunch – that erased a lot of the gains that we had made.  During that time, however, we were building up our stock holdings, which meant that when the markets finally did really take off, we were ready to take advantage.)  Once things started happening and the compound effect took hold, it seemed like everything changed fast.

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We reached financial independence about four years ago.  This means that we could stop working and make enough from our investments to live on.  At that time it would have been a fairly  meager living, but really not too bad.  In the last few years we’ve almost gotten to the point where we could fully replace salaries from investments – as I said, things happen fast.  This means I’m 45 and could probably just quit working if desired, which I don’t, but it does allow me the flexibility to care about what work I do).

Hopefully some others out there are reading The Compound Effect with me so that we can all discuss it at the end of May.  I hadn’t planned on discussing it before I had finished the book, but couldn’t help myself.  I hope others are enjoying the book as well and finding things they can use in their lives.

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

What Small Decisions Do You Make


 Last week I announced the formation of The Small Investor virtual book club.  Each month we’ll have an investing or personal finance book to read.  This month we’re reading The Compound Effect by Darren Hardy.  If you would like to join in, grab a copy (you can get one from Amazon here: The Compound Effect).
I wasn’t planning to write again about the book until I finished it and have just started reading; however, I was struck by the premise of the book presented in the first chapter, that it is the little choices we make every day that make a big difference in our lives, but we don’t see the effects of those choices until many months or even years later.  A good example that Hardy uses is that eating just 125 extra calories a day – having a Coke with lunch instead of water – could make you 30 pounds heavier after a period of several months to years.

The Compound Effect

That started me thinking about the whole “Living Wage” movement and how activists are demanding that the minimum wage be set to $15 per hour, as if that would drastically change the lives of those who are perpetually on minimum wage.  Looking at the economics of that proposal, I think a high minimum wage would just cause automation and the loss of a lot of jobs, plus prices would just rise so those who did get to keep their jobs would be in about the same economic place.  The idea of the compound effect, however, got me to wondering: Is there anyone out there who consistently makes good choices who is on minimum wage after many years?  Specifically, please let me know if you are still on minimum wage after two years if you:

  1.  Always show up to work on time, ready to go.
  2. Stuck with a job for several years, rather than always quitting and starting another minimum wage job.
  3. Have a pleasant attitude every day, at least when dealing with customers and coworkers.
  4. Work hard at your job, always trying to get things done and please the customer.
  5. Take advantage of opportunities that come in your working career when they are available.
  6. Seek out additional education to learn new skills, including picking up books from the library or reading articles on the internet to learn skills.
  7. Have finished high school, or at least have gotten a GED.
  8. Look around for other job opportunities regularly.
  9. Volunteer and get involved in things like Habitat for Humanity or Boy Scouts, and maybe one of the clubs like the Lions or the Rotary club.

If that is true for even one person, I’ll sign up for the Living Wage movement today.   If you haven’t and are tired of being at minimum wage, would you be willing to try these things and report to us in a couple of years where you have gotten?

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.

The Small Investor Book Club


 They say that one characteristic of successful people is that they read a non-fiction book a month.  I was thinking that it would be neat to start doing this, plus, maybe do it as a virtual book club with readers of The Small Investor.  Each month we’ll have an investing or personal finance book to read.  At the end of the month, I’ll post my thoughts on the book and invite blog readers to do the same.

This month I’ve chosen The Compound Effect by Darren Hardy.  The description for the book is:

“No gimmicks. No Hyperbole. No Magic Bullet. The Compound Effect is based on the principle that decisions shape your destiny. Little, everyday decisions will either take you to the life you desire or to disaster by default. Darren Hardy, publisher of Success Magazine, presents The Compound Effect, a distillation of the fundamental principles that have guided the most phenomenal achievements in business, relationships, and beyond. This easy-to-use, step-by-step operating system allows you to multiply your success, chart your progress, and achieve any desire. If you’re serious about living an extraordinary life, use the power of The Compound Effect to create the success you want.”

The Compound Effect

If you’d like to read along, grab a copy from your favorite bookstore or order a copy from Amazon by clicking on the book image above.   Let me know if you’re going to be reading along!

Follow me on Twitter to get news about new articles and find out what I’m investing in. @SmallIvy_SI

Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.