book review barefoot investor - the good, the bad and the ugly

Today I’m sharing my barefoot investor book review: The Barefoot Investor : The Only Money Guide You’ll Ever Need by Scott Pape

The start of the book talks about how his house burnt down and how he put that pain and suffering to work in the form of this book. 

The book breaks down your finances into 9 simple steps to achieve everything you need. It’s probably the most well known book on Finance in Australia and it certainly has lovers and haters of his approach. 

Whilst there’s a lot that I agree with regarding the principles, there are some areas that I have a different view. Ready to hear the good, the bad and the ugly? Let’s jump in.

The Good

The steps themselves are relatively easy to follow and written in a way that encourages you to take action. As finance books go, it’s really not too heavy compared to others I’ve read. 

I also appreciate his advice around watching your fees when it comes to your super. You 

Can read more about the impact of not watching them in my blog post about superannuation. 

His advice around earning extra income is also solid. Just make sure you’re not burning the candle at all ends to do this otherwise you won’t be able to enjoy the extra income you’ve saved. 

His view on reducing your debts and turning it into a game is also pretty compelling as well as his push for people to pay off their mortgages and own their own homes. I know too many people (and I’m sure you do too) where their strategy is to continually upgrade to the next property and never actually pay their mortgage off. 

Finally, I enjoyed reading the example stories from people in the book on what they achieved as it made the steps feel more real. 

The Bad

I don’t agree on his approach on how to nail your retirement number. It unfortunately relies on government handouts (the government pension) to make up the majority of your retirement payments. The calculation doesn’t also take into account that this income will be assessed and you’ll likely not get the full amount. It also relies on your ‘desire’ to keep working at least part time.  Personally after 40+ years of working, that would probably be the last thing on my mind, but I’ll let you know when I reach that age. 

His view on credit cards is pretty reductionist. Basically you should cut them up and only rely on debit cards. Whilst this advice might be good for some, it’s not for everyone. Believe it or not you can actually make money on credit cards.

Whilst he talks about the need to invest, he doesn’t actually talk about the mechanics of how to do this or what you should be looking for when purchasing a company or fund. He has a generic statement around speaking to your Superfund to set up your account. If you are interested in investing where I take absolute beginners and turn them into investment pros, you can take a look at my courses here.

Now, when looking at his bucket strategy for setting up bank accounts, I personally found they just didn’t offer the level of nuance I needed to manage my finances. I’m sure it could work for others but for me I ended up setting up more buckets to make the system work.   

The Ugly  

The first thing for me that was a bit cringy was the concept of a barefoot date night. This is where you take your partner out for a nice meal and discuss your finances. Personally, if I'm on a date with my partner, that’s probably the last topic I want to be talking about when enjoying good food and a drink or two. 

His concept of having a balanced portfolio is also a bit out of whack. When it comes to your portfolio, the book mainly talks about having savings and shares and pretty much writes off investment properties and commodities such as Gold. He also doesn't mention rebalancing your portfolio to take the profits from some areas and use them to fund other asset types. This is pretty much the opposite view from the moneysmart website.

Here’s a quote from the site: 

“Diversification is your best defence against a single investment failing or one asset class performing poorly (for example, the share market falling or one fund manager failing).”

The final thing to mention in this section is comparison between buying quality underwear and a business class flight and basically saying they’re the same. Sorry but I can’t get onboard with this analogy. 

Summing Up

Overall I think it is a good book but I don’t believe the tagline of “The only money guide you’ll ever need”. Diversity of thought from a variety of books is key here rather than just relying on one. 

Disclaimer

None of  the content is intended to provide you with personal financial advice. This piece is intended to be for educational or entertainment purposes only. You may wish to seek independent financial advice from a professional advisor for advice pertaining to your specific situation.