The Barefoot Investor, Scott Pape

Good for: Beginners (and those who think they are not beginners!)

Topics: Personal finance, superannuation, retirement, shares, property and insurance

You can buy The Barefoot Investor from Big W for $20 (Scott is donating some of the proceeds to a great cause).

What I learnt

Written by Scott Pape, one of (the?) Australia’s leading voices on superannuation and personal finance, The Barefoot Investor is as much a motivational story as it is a ‘how to’ on personal finance in Australia.

Scott has taken his years of experience in providing candid and thoughtful advice, and rolled it into 200(ish) pages which document the carefully crafted and concise ‘Barefoot Steps’.

I believe Scott has done what so many financial experts fail to do: provide real-life expert advice that anyone can understand and follow.

3 key takeaways

The right mindset. This is not a new concept to me, but I think Scott does an excellent job of conveying and describing the two mentalities most people hold when they approach their finances. Pape says some people have a groundhog mentality; others are alpacas. People who have ‘the alpaca mentality‘ are the people who attack their finances head on. They dig their heels in and refuse to give up. “Most people aren’t alpacas – they are groundhogs”, Pape writes. You could guess which type of person gets the most from reading his book.

Housing. My experience is in shares and share markets, so I’m biased in any ‘shares versus property’ debate. However, The Barefoot Investor reminded me of some of the significant longer-term studies conducted on the returns from property markets, both locally and overseas. One of my favourite business writers of all time, Morgan Housel, quoted the same study as Pape. It was a study by Yale’s Robert Shiller. Housel’s article, Americans vs. Reality: Why Your Home is Not a Good Investment, is well worth the time it takes to read the article (~4 minutes). Hint: The heading says it all. 

Finance is simple. The Barefoot Investor hammers home how easy it is for ordinary people with the right attitude to make simple changes to their finances for extraordinary outcomes — over their lifetime. From superannuation to banking and job promotions, Pape’s book will give anyone the courage to wrestle their finances and make simple choices for great returns.

In my opinion, for Australians aged 15 to 100, The Barefoot Investor will pay for itself one thousand times over.

It will be one of the best investments you ever make.