Book Review: Ordinary People, Extraordinary Wealth

Ordinary People, Extraordinary Wealth by Ric Edelman
This book is a good example of why most people don’t become wealthy — because they read and believe financial books like this. The author is a financial adviser who claims to have interviewed his successful clients and then reported in this book their comments about money. Clearly the results are cherry picked. If you followed the advice in this book, you would not spend more than a few hours a month on your finances and you would turn all of your money over to a financial adviser, perhaps even Mr. Edelman. The whole book is basically one big sales brochure for the author’s firm.

A much better book to read is the Millionaire Next Door, which was written by a couple of university professors who study the affluent for a living. Since they are familiar with commonly accepted research methodologies, the advice in the MND book is much more specific and research oriented rather than anecdotal. It is also less biased since the authors of MND are not investment advisers.

Interestingly, in the MND the authors found that most millionaires make their own investment decisions and spend a fair bit of time budgeting and managing their money, which seems to make a lot of sense and directly contradicts the anecdotal findings reported in the Ordinary People, Extraordinary Wealth book.

For a good book to read on specific investing strategies on how to really get wealthy, I also recommend All About Asset Allocation, by Richard Ferri. This is a good book on how to invest on your own by using no load, index based mutual funds and get better returns than you could by paying most financial advisers.