The Algebra of Wealth
Published:
I recently read The Algebra of Wealth by Scott Galloway. An article about it came up on my Google feed and the book looked interesting, so I borrowed it from a library. (I could have clicked “Buy Now” on Amazon as it costs less than $20 and I could have used my research fund, but I am frugal.)
The book discusses how to achieve financial independence (the author uses “economic security” instead but I think it is synonymous), often based on the author’s experience.
Even by just reading the table of contents, you can get some good advice, like “don’t follow your passion” and “follow your talent”. Among the four chapters, I found chapter 3 on “time” less interesting, but the rest (“stoicism”, “focus”, and “diversification”) pretty good. A concise summary of the book would be “work hard, save, invest in a stock market index fund, and hire a tax attorney”. I liked several quotes, such as
Happiness is not having what you want - it is wanting what you got
or
Work is a bit like dating - the less you need the job, the more it needs you
The author recommends taking the Myers-Briggs personality test to figure out what kinds of careers are suitable for you. I googled it and tried this one. I turned out to be 100% introvert, 89% thinking, and 85% judging, which are not surprising. Apparently, a career that is a good fit for me is science, technology, or business strategy, so I made the right choice. The test claimed that my strengths are strategic vision, analytical thinking, independent thinker, efficiency, and my weaknesses are high standards, aversion to routine, direct communication style, too independent, which all seem to be true.
The section on stocks from p.203 to p.220 is pretty good. Although I am not interested in investing in individual stocks, I can see the benefit of somebody analyzing financial statements of firms, and the author must be very good at it. In contrast, I was disappointed by the section on taxes from p.236 to p.249. I expected a more in-depth treatment of various tax-saving tips, but it was rather superficial. For instance, regarding health savings accounts (HSAs), the author only states
Health savings accounts (HSAs) can be used to avoid taxes on income you expect to need for health care expenses
and that’s all. There was also no mention of well-known loopholes like the backdoor Roth.
Overall, I would recommend the book as a motivation to start working hard, saving, investing, and achieving financial independence. But to put theory into practice, readers would need to do a lot of homework like understanding how taxation works.