From the shelf · 102 money books
Does The Barefoot Investor hold up?
The Barefoot Investor by Scott Pape is one of the 102 money books on The Money Shelf. The shelf links it to 5 of the 22 claims that the book tests against official records from the United States, the United Kingdom and Australia. Each verdict below comes from that test.
Claim 3 · The book makes this claimPay yourself first: save before you spend
Holds with conditionsThe paper’s own results support pre-committed saving out of future pay rises as a way of raising saving rates among employees who agree to join, and the condition is that the household has income left after essential spending, because the national ratios show only average room.
Read the full test →Claim 4 · Linked to the book by the shelf; its publisher’s description does not confirm itIndex funds: own the index
HoldsOver every period of five years or longer, at least 83 per cent of US large-cap funds, at least 92 per cent of UK large- and mid-cap funds and at least 81.6 per cent of Australian equity general funds lagged their index, and the one figure below 80 per cent over those periods, UK small-cap funds over 10 years at 76.62 per cent, is still a majority.
Read the full test →Claim 5 · Linked to the book by the shelf; its publisher’s description does not confirm itDebt snowball: pay off the smallest debt first
Holds with conditionsThe arithmetic favours the highest rate first in every country, and the support for the smallest-balance-first order is behavioural: one observational study of real debt (Gal and McShane) and one lab task (Brown and Lahey), while a third study (Amar and co-authors) found that people tend to pay small debts first, at a cost, and that prompts about accumulated interest helped.
Read the full test →Claim 6 · The book makes this claimEmergency fund: keep three to six months of expenses in cash
Holds with conditionsUK and Australian guidance supports a buffer of three months or more, and the US guide leaves the amount to the household.
Read the full test →Claim 16 · The book makes this claimRent or buy: buying a home builds more wealth than renting
Not establishedOwners hold far more wealth than renters in the US, Great Britain and Australia, and a long-run study of 16 economies finds that housing returned about as much as shares with less variation, yet the gap can reflect who becomes an owner as well as what ownership does (inference by this audit).
Read the full test →The Barefoot Investor raised the question. The records take it further: every figure dated, every source named, and the arithmetic worked through for three countries.
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