The Sound Mind Investing Handbook Review

The Sound Mind Investing Handbook

This is a review of The Sound Mind Investing Handbook: A Step-By-Step Guide to Managing Your Money from a Biblical Perspective by Austin Pryor.

Initial Impressions

  • Text-Book? – This book looks like a text-book and smells like a text-book.  Luckily, though, I was shocked to find it reads so much better than a textbook.  Once you dig into the first couple of pages the book really starts to flow smoothly.  The book does a great job of balancing relevant and thorough information with readability.
  • Pre-Highlighted – This will be one of the first things you notice.  The book actually comes with certain texts highlighted yellow, which adds to the feel of a textbook.  To be honest, I’ve never seen this before in a book, but once again it really added to the readability.  For example, it allows readers to scan sections they might be very familiar with, while still retaining the most valuable information.
  • Great Previews – Each chapter contains a full-page outline of the content you will be exposed to.  Although this is certainly not unique, this book does it extremely well.
  • Up-to-date – The 5th Edition text was updated as of October 2008.  I read a lot of books, especially financial ones, that become out of date very quickly.  This is even more true given our current recession.  I found it refreshing to read information that was less than a year old in some cases.
  • Christian Influence – The book makes no mistakes about being heavily based on the principles of Christianity.  This can be both a strength and a weakness.  Luckily, the references are not overwhelming in the sense that they distract from the financial principles themselves.  More on this later.

Section 1:  Getting Debt-Free

As you might of guessed, you’d be hard pressed to have a section titled “Getting Debt-Free” that I wouldn’t approve of.  I was really impressed though that at the depth of the content involved in these first few chapters.

Pryor begins by outlining the benefits of a debt-free existence.  I enjoyed that he allocated a large amount of the section to talk about the non-mathematical benefits, which I find much more inspiring that just another explanation of how interest works against you.

Pryor continues to outline how to create a detailed “spending plan,” including advocating the debt-snowball approach to debt reduction.  Afterward, he digs deep into details on the specifics of credit cards, including fees, balance transfer, and spending mentalities.

Pryor wraps up this section with an entire chapter devoted to the benefits of paying off your home.  This is a highly debated subject and the Pryor does a great job of laying out the benefits of one side of the coin.

Section 2:  Saving For Future Needs

In this section, Pryor shifts his focus into talking about savings.  To be honest, I’m not sure this should have been its own section.  I felt some of the content was stretched a little to enable this to be a stand alone section.

Pryor starts by examining what levels of savings are adequate, before shifting his focus onto the importance of emergency fund.  Throughout the next several chapters, he exhausts different options for where to keep your emergency fund in order to maximize your return.  He talks about banks, credit unions, CD ladders, money funds, and Treasury bills.  Although this information is certainly valuable, I think it borders on providing too much information and thus not motivating people into action. I’d prefer my advice to focus on the act of getting the emergency fund together and treating it as insurance, rather than an investment.

Pryor does a great job of concluding this section with a full chapter on preparing for finances to support college.

Section 3:  Investing Your Surplus

Investing is simply giving up something now in order to have more of something later.

I enjoyed how Pryor defined investing towards the beginning of this section.  The above quote is part of a thought-provoking look into what investing actually is, including investing by lending and investing by owning.

Soon we find that Pryor is a huge advocate of Mutual Funds.  In fact, in the next few pages he outlines over 20 advantages of utilizing this investment vehicle.  He provides details on the different types of funds, how they are sold, and how you can buy them.

Once again, I appreciate how Pryor wraps up this section.  After a couple chapters on the benefits of mutual funds he finished with some necessary cautions, including the tax consequences and risk tolerance.  I appreciate this sort of writing, which tends to help paint a more complete picture.

Section 4:  Diversifying For Safety

Pryor spends the early part of this section outlining the basics of both the bond market and the stock market.  I really connected with this section in part because I had a lot to learn from it.

Pryor continues to leverage the diversification theme to demonstrate 6 different portfolio allocations based on what he calls “just-the-basics.”  He creates characters (Daredevil, Explorer, Researcher, Preserver) to help readers connect with how they can select the appropriate mix.

The last three chapters in this section break down step-by-step instructions on how to diversify.  Pryor includes detailed strategies for specific portfolios and how to make the transition between types.  Although, I’m not currently in a phase of my life where this information is applicable, I found the content very engaging.

Section 5:  Retirement Countdown

This section begins with a step-by-step walk through on exactly how much money you will need in retirement.  In fact, I would venture to say this is the most thorough break down I’ve ever seen on this topic.  He left no detail behind.  I think this a wonderful, because so many people choose to ignore the truth about retirement.

Pryor then shifts to outline specific retirement investment vehicles.  He focused on those commonly offered by employers (profit sharing, SEP, 401k, & 403b), as well as personal options (IRA, Roth IRA, etc…).  He wraps up this section with a chapter devoted to decreasing risk as you approach retirement.  Sounds basic, but as this downswing has proved, a lot of people choose to ignore this advice.

Section 6:  Investing That Glorifies God

Although the book makes no mistakes about advocating a biblical approach to money, this is the first chapter where I felt it was the primary focus.  Frankly, I respect someone who is willing to stand by their principles and infuse them into the work they do.  The only problem I have with this is when an implication is presented that there is only one way to successfully approach finances.  This final section walks the border of this boundary for me.

The overall point is that you should ensure that your financial priorities are in line with the principle by which you live your life.  In this specific instance it’s about Christianity, but in reality it can be applied broadly as well.  The book ends encouraging the reader to relish in the blessing that comes with financial security and responsibility.

Should You Read This Book?

Most likely, you should. Simply, this book is an amazing resource.  I would strongly recommend it to family and friends.  It’s very lengthy and definitely has a text-book feel.  However, as I outlined above, Pryor really focused on ease of readability.  Whether you are just beginning your journey or a seasoned personal finance pro, you can find something worthwhile or thought-provoking in this book.

The only exception would be for those people who are easily offended by religious overtones. I don’t mind them as long as they contribute to the topic being discussed.  I found that to consistently be the case with this book, so it didn’t bother me.

You can find out more information by researching the book on Amazon.

Have you read the book?  What were your thoughts?  Did you enjoy it?  Let me know by commenting below!

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