The Capitalist Code: It Can Save Your Life and Make You Very Rich by Ben Stein
In THE CAPITALIST CODE, Ben Stein gives the reader some valuable money lessons. These lessons are delivered in a funny, easy fashion, and liberally sprinkled with personal anecdotes and observations.
The key point is this: Free market capitalism is an incredible machine for making wealth. Corporations “rain money” year after year. If you don’t participate, you are making a huge blunder. It doesn’t take a genius, but it does take a plan—a “little bit of knowledge and an even smaller amount of action.”
The author cites some alarming statistics, noting how poorly prepared many folks are: For example, 80% of millennials have no plan whatsoever for retirement savings. They are saving NOTHING, which the author notes is “not a formula for sleeping well at night.” Similarly, the average person says they need about $50,000 per year for retirement; but only has savings to achieve 20% of that number.
A few points along the way:
Education: “There is a clear, unequivocal , if generalized, connection between the amount of education that a man or woman achieves and the amount he or she earns.”
Spending: “You must arrange your life from the very get-go so that you are spending less than you earn.”
Picking Stocks: You don’t need to “play the market” and try to pick stocks. Just buying and holding index funds is a simple, effective method that beats money managers most of the time
The author provides a “bullet point” summary in the very last chapter of the book:
- Free market capitalism is a fantastic wealth-producing system.
- This system allows individuals to amass wealth.
- Free market capitalism is not an evil, blood-draining system. Instead, “There is no freer, more diverse, and more equal opportunity employer than capitalism. . . .If you can produce a large amount of excess over your costs, you get well paid. And if you produce very much more than you cost, you get rich.”
- You must acquire wealth: “A highly disproportionate amount of the good things in life accrue to those who have financial capital." The easiest way is to own index funds.
- Hold onto these funds as long as possible.
- Take advantage of huge tax subsidies for deferring investment gains.
So all in all, I found THE CAPITALIST CODE to be a fun, practical read. It's a short book, and you can finish it in just a few hours. I was already familiar with the author's main points, so I didn't see any startling new ideas. Nevertheless, I still enjoyed his perspective on the subject, which he knows a lot better than me. And of course, I enjoyed his witty observations.
I thought this one line summed up the book succinctly:
“Life can be faced by moaning and complaining or it can be faced by study, work, optimism, and faith in the free capitalist system.”
Advance Review Copy courtesy of the publisher.
