Multiply Your Money - The easy guide to Savings and Investment is very much a ?does what it says on the tin? style book. It takes the inexperienced investor through the most common strategies for multiplying their money.
However, its most powerful message is not how to invest but why you should do it. The risks of leaving money in cash savings on low-interest rates, even for people who are very careful with their money, are laid out for all to see. For those people, this book shows how multiplying your money is far from being rocket science.
The magic of compounding is a message that Fidelity likes to share with customers. One of the best examples of this is given in the first chapter and is enough to give any young person the motivation to start saving early if only they were to read this book.
Author Nick Louth shows how a 16 year old putting away £100 a month for ten years would have a bigger pension pot at 65 than a 30-year-old starting to save the same amount per month up until retirement at 65.
Now, I know what you?re thinking ? who amongst us can remember having £100 spare at the end of every month during our late teens/early twenties? Not many, true, but then imagine not needing to save another penny for retirement from the age of 26! Alice only saves for ten years of her life, but, because she got on with it early, she reaps the rewards; but then youth is wasted on the young.
The book is clear and easy to understand and is written in a style that allows the reader to visualise financial concepts. The best writers are able to do this easily for their readers and it?s no surprise that Louth has also written thrillers.
He explains the advantages of investing in companies rather than in gold, commodities or gilts, because companies are?living?, growing things, built around people who have the opportunity to develop the company, changing the business focus in response to market conditions, selling off subsidiaries, acquiring new assets, and sometimes taking the company in a completely new direction.
?It is this organic nature of a company, the way it grows as if through cell division, that gives the potential of multiplying your money, and is why shares outperform all other investments over the long term,? he tells us.
These types of examples are a brilliant way of illustrating financial concepts.
Louth uses runaway trains for momentum investing; Chinese legends for compounding; supertankers for large mutual funds; ?Through the looking glass? for profit warnings; and many other everyday analogies that will entertain as well as inform the reader.
I almost didn?t read Chapter 6 as I was told not to bother if I was the sort of person who steams off unfranked stamps.* But I was glad I did, as he focuses not just on boring stuff like trimming spending, but also on everyone?s ability to increase their income through their own development and skills, essentially seeing yourself as an asset.
I found the chapter on bonds particularly useful. Bonds are one of those complex areas that lots of people pretend to understand but not that many actually do. Even people who are invested in bonds can often have only the vaguest understanding of what they are invested in. Again Louth uses easy to understand examples to illustrate how bonds work and how the price and yield are influenced by interest rates.
Tracker funds are highlighted as a really easy route to investing in the stock market. Their low-cost fund charges, without the need for a large research team, and their broad access to most or all of the companies in a particular index, offer returns well ahead of cash, providing you are reinvesting dividends and are in for the long term ? as most investors should be.
For anyone thinking that they would like to have a nice retirement (ie. all of us) or would like to save for their child?s house deposit but haven?t ?taken the plunge? with investing this book will not only convince you why, but will also give you the confidence to how you can begin Multiplying your Money.
*Now that stamps are sticky and you don?t have to lick them they can be peeled off, carefully.
Fidelity rating: 5*