How to take ownership of the world – 5 books that changed my life
In 2013, I attended the launch of the first edition of the book in the wood-panelled surrounds of the Churchill Room at Dartmouth House in Mayfair. A year later I would host my first wealth summit in this same room, but by 9 p.m. we had outgrown it and moved around the corner to Harry Selfridge's old neighborhood, Lansdowne Club. One of the highest rated speakers of the day was Andrew Craig, with a long queue forming for signed copies of his book. Shortly after, he asked me to become president of his company, Plain English Finance, and later this year we are launching an investment fund that implements the core strategy outlined in How to Own the World.
Much like Rich Dad, Poor Dad, the power of this book lies in its simplicity. Essentially, the message is that there is always something doing well somewhere in the world, so if you diversify your portfolio to hold as many different assets in as many countries and currencies as possible, you are bound to benefit from the growth wherever it occurs. This is a refinement of an idea that has been around since the 1970s, when Harry Brown launched his permanent portfolio. He placed twenty-five percent in stocks, twenty-five percent in government bonds, twenty-five percent in cash and twenty-five percent in gold. Each year he rebalanced the portfolio by selling what had risen the most and buying more of what had fallen until all four shares were equal again.
Seems simple enough? Well, the results far outperform most other strategies, especially when considering consistent returns over a long period of time. And when you compound returns of between nine, ten and eleven percent over a decade or two, the results are completely life-changing. Andrew's strategy has been tested by two business school professors in London over the past twenty-five years and is said to have returned just over ten percent per year over that period. If you hold cash in the bank or in an ISA and get one or two percent, you're wasting a lot of time.
Today we have far more resources than Harry had, with products like exchange-traded funds or ETFs providing low-cost access to any type of asset, market or index with just one mouse click. In the UK we have tax-free packages like ISAs where you can soon shelter twenty thousand pounds a year and SIPPs where you can shelter forty thousand a year. Few people can save more anyway.
The essence of Andy's book is that today there are no more excuses. The investment vehicles are there. The tax wrappers are there. All you need is the discipline of automatic savings. If you take the current tax-free ISA limit of fifteen thousand each, a married couple can save thirty thousand a year. Assuming an average return of ten per cent, by the end of a decade you will have almost half a million pounds tax free. After another decade, that figure would reach one point seven million pounds.
So if you do nothing other than save regularly in an ISA and choose well-diversified funds that provide access to global growth, you'll be set up for life within twenty years. Those of you in your 40s who worry you waited too late to get started should take heart. You don't have to join the mediocre majority who enter retirement with thirty thousand dollars in their retirement kitty. You shouldn't rely on the government to bail you out either, as Andrew reminds us in How to Own The World.
The ultimate goal of the Elite Investor Club is for members to achieve financial independence so that they can live their lives on their terms and not have to rely on an employer or government to do so. How to Own the World by Andrew Craig has become required reading for our members and I suggest it be at the top of your own must-read list. The book has been heavily revised this year and Andy has created some tutorial videos on plainenglishfinance.com to help you not only lay down the basics of automatic wealth, but also go further and become a more active manager of your investment funds. if you want to get more involved.
The fact that you're looking at this means you're probably already a savvy or wealthy investor. But don't think you have nothing to learn from this book. When I look back on my own investing history, I would be hard-pressed to match the results of this simple diversification strategy. Use it as the basis of your portfolio, then experiment with more exotic products knowing that you'll generate double-digit returns year after year with a large portion of your net worth.
Thank you for watching.
Much like Rich Dad, Poor Dad, the power of this book lies in its simplicity. Essentially, the message is that there is always something doing well somewhere in the world, so if you diversify your portfolio to hold as many different assets in as many countries and currencies as possible, you are bound to benefit from the growth wherever it occurs. This is a refinement of an idea that has been around since the 1970s, when Harry Brown launched his permanent portfolio. He placed twenty-five percent in stocks, twenty-five percent in government bonds, twenty-five percent in cash and twenty-five percent in gold. Each year he rebalanced the portfolio by selling what had risen the most and buying more of what had fallen until all four shares were equal again.
Seems simple enough? Well, the results far outperform most other strategies, especially when considering consistent returns over a long period of time. And when you compound returns of between nine, ten and eleven percent over a decade or two, the results are completely life-changing. Andrew's strategy has been tested by two business school professors in London over the past twenty-five years and is said to have returned just over ten percent per year over that period. If you hold cash in the bank or in an ISA and get one or two percent, you're wasting a lot of time.
Today we have far more resources than Harry had, with products like exchange-traded funds or ETFs providing low-cost access to any type of asset, market or index with just one mouse click. In the UK we have tax-free packages like ISAs where you can soon shelter twenty thousand pounds a year and SIPPs where you can shelter forty thousand a year. Few people can save more anyway.
The essence of Andy's book is that today there are no more excuses. The investment vehicles are there. The tax wrappers are there. All you need is the discipline of automatic savings. If you take the current tax-free ISA limit of fifteen thousand each, a married couple can save thirty thousand a year. Assuming an average return of ten per cent, by the end of a decade you will have almost half a million pounds tax free. After another decade, that figure would reach one point seven million pounds.
So if you do nothing other than save regularly in an ISA and choose well-diversified funds that provide access to global growth, you'll be set up for life within twenty years. Those of you in your 40s who worry you waited too late to get started should take heart. You don't have to join the mediocre majority who enter retirement with thirty thousand dollars in their retirement kitty. You shouldn't rely on the government to bail you out either, as Andrew reminds us in How to Own The World.
The ultimate goal of the Elite Investor Club is for members to achieve financial independence so that they can live their lives on their terms and not have to rely on an employer or government to do so. How to Own the World by Andrew Craig has become required reading for our members and I suggest it be at the top of your own must-read list. The book has been heavily revised this year and Andy has created some tutorial videos on plainenglishfinance.com to help you not only lay down the basics of automatic wealth, but also go further and become a more active manager of your investment funds. if you want to get more involved.
The fact that you're looking at this means you're probably already a savvy or wealthy investor. But don't think you have nothing to learn from this book. When I look back on my own investing history, I would be hard-pressed to match the results of this simple diversification strategy. Use it as the basis of your portfolio, then experiment with more exotic products knowing that you'll generate double-digit returns year after year with a large portion of your net worth.
Thank you for watching.
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