Susan L. Hirshman, a wealth strategist and CPA has written a book using dieting strategies as a metaphor for successful money management.
What I liked:
I liked Hirshman’s evaluation phase. Normally, I skip over the personal evaluation sections in money management books, but this one was easy to follow and worth doing. Hirshman stresses the importance of knowing what you have, what you can expect to save and what it is that you want to have. She recommends doing this analysis every five years (every three if you are near or in retirement). I also liked that she indicates items like cars and furniture are not assets.
The book is current, published in 2010 it covers the 2008 recession and the housing market collapse. Hirshman points out that a house is a place to live not an investment.
Hirshman does an excellent job explaining risk and the difference between diversification and asset allocation.
A portfolio that is diversified does not necessarily mean that it is well allocated, because you may have lots of different investments but allocation or the balance between the asset classes is not optimum. (Pg. 88)She recommends rebalancing your investments on a yearly basis.
The book explains the different types of investments; stocks, bonds, ETF’s, and annuities. It includes a section on insurance and why we may need various insurance products. I liked that Hirshman gave the drawbacks and criticisms of investments (e.g. variable annuities) before giving her opinion.
What I didn’t like:
I thought the diet analogies weren’t necessary and at times out of place and down right annoying. I understand the need for a personal finance book for women; women earn less, take more time off from work and live longer etc, but are separate books really necessary to explain basic financial concepts?
Hirshman recommends rolling your 401(k) from a previous employer into your new employer’s 401(k) plan. Granted rolling this account into any plan is preferable to cashing it out, Hirshman should have told the reader many 401(k) plans have high fees and are limited in their investment options. Opening an individual IRA may be a better option.
Overall the book is a comprehensive introduction to personal finance. I would have recommended it as a book to purchase for future reference, but despite including a glossary of terms there isn't an index. As I wrote this review I wanted to go back and re-read a couple of items and was frustrated by the lack of an index.
As to my list of personal finance books for women, to date I have only two other titles:
Suse Orman’s Women and Money: Owning the Power to Control Your Destiny
Vicki Robin's Your Money or Your Life: Transforming Your Relationship with Money and Achieving Financial Independence
Do you have a favorite personal finance book I should recommend?