Stop Over-Thinking Your Money: The Five Simple Rules of Financial Success by Preet Banerjee is one of the books I am reading in 2021 for my personal finance goals. Here’s genymoney.ca’s Stop Over-thinking your Money book review.
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Stop Over-thinking your Money is a book from 2014, it’s a bit dated with financial technology booming so much in recent years, but it has some really solid advice. I’m surprised I haven’t read this book sooner.
Who is Preet Banerjee?
If you haven’t heard of Preet Banerjee, he’s sort of like a Canadian personal finance celebrity. He was a host of the show Million Dollar Neighbourhood on Oprah Winfrey’s Network. He is also a money columnist for The Globe and Mail. He also has a podcast called Mostly Money, Mostly Canadian.
I think I remember reading somewhere he was planning to go to medical school, but then enrolled in racing school instead (yes, racetrack racing school). Then he went on to work in the financial industry. He has founded the startup MoneyGaps.com (it is a tool for financial advisors to use with their clients) and he has a popular Youtube Channel called Money School where you can ogle at his super minimalist, nicely designed apartment and see a view of the beautiful Toronto skyline.
A little interesting tidbit, I met Preet Banerjee many years ago for a ‘personal finance blogger’ meet up at a fancy restaurant in town. He seemed very charismatic and funny. I was a bit star struck so mostly kept mute and kept to myself, as I was busy making sure I didn’t have spinach in my teeth or anything.
Alright, back to the book! Here’s my Stop Over-thinking your Money book review.
What I Liked About Stop Over-thinking Your Money
At first, I thought this book would be repetitive and just regurgitate basic personal finance information that many people already know about, however, I learned a few new things.
I enjoyed reading this book, he has a very clear way of explaining things, using analogies, and boils complicated concepts into more simple terms.
For example, one analogy was comparing personal finance and personal fitness. We all know that we need to exercise and eat better, but it’s the application of that knowledge that is difficult for most. The actual ‘doing’ part. Same thing for money. We know we should be saving and investing but the application, self-discipline, and habit is difficult for many.
Another simple truth that I find isn’t mentioned very much, is that you need to learn to save before you invest– saving is the egg and investing is the chicken. You can’t invest if you don’t save.
Preet Banerjee talks about how fees can erode your investments but when you are starting out it really doesn’t matter, what matters most is starting to invest when you are younger and getting into the habit of saving and investing. It’s true. Sure a 2.5% MER is a lot, but on $5,000, it is $125 in absolute dollars. On a $500,000 investment portfolio, however, it is $12,500. Most people in their 20’s won’t have $500,000 to invest though right away.
One lesson that I learned the hard way (gullible millennial I am, I guess), is his tip to not sign contracts at the door. Perhaps I was just in a sleep deprived, delirious state, but I had been wanting our exterior windows cleaned for a long time, but never found the time to do research on who to hire. Some guy knocked on our door and said he was in the neighbourhood cleaning a neighbour’s window. I did some price comparisons with competitors, and he did state what he would do and wouldn’t do (e.g. couldn’t reach up high to remove paint splatter), but his quote was the cheapest.
Anyway, his company cleaned the windows but it wasn’t the best job, and many of the windows were still dirty.
In the book Stop Over-thinking your Money, he also dedicated a chapter explaining the details between universal life insurance, whole life insurance, and term life insurance, and how to calculate exactly how much life insurance you need to buy.
This is down to the detail of how much the immediate expenses might be (for example, paying off any debts, paying off funeral expenses, salary replacement for 6 months bereavement time) and ongoing expenses might be.
Finally, Preet Banerjee seems like a friendly guy with multiple instances of asking the reader to contact him on Twitter @preetbanerjee should they have any money related questions.
What I Disliked About Stop Over-Thinking Your Money
Not many things I didn’t like about Stop Over-thinking your money. Preet Banerjee recommends using the age based asset allocation guide (you know, the one whereby if you are 30 years old you should have 30% of your portfolio in fixed income such as bonds), though he did acknowledge that it is individual and what works for some might not work for other.
I have a feeling that maybe he doesn’t truly have such a high regard for bonds because his website in the book “Where Does All my Money Go” redirects to a website link “Bonds are for Losers”. On the website, he does acknowledge that he doesn’t really think bonds are for losers though, ha!
I thing I noted was that he touted financial advisors (this is not a thing I dislike, I like that he provided reasoning for it) as not being all bad. Financial advisors can provide a package of personal finance advice (like estate planning, organizing a will, life insurance) and aren’t just for investing. He provided a question list to ask your financial advisor to trust with your money.
Personally I still would rather do DIY investing but that’s probably because I don’t trust people easily. I can see the utility though in having someone help you with important personal finance pieces outside of strictly finances.
What’s my final Stop Over-thinking your Money book review? All in all, this is a very good personal finance book for Canadians.
He has some very solid wisdom in this book, sort of focusing more on the psychology of money rather than the technical aspect of investing. He speaks the truth when he said your financial strategy might change often and you end up with a hodgepodge investment portfolio that doesn’t look right.
Best to start simple straight from the beginning in your 20’s and invest in an index fund that rebalances itself, like the VGRO ETF or Tangerine Investment Funds. Then try your best not to over complicate things as the years go by.
Have you read Stop Over-thinking your Money?
What did you think of it?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.