Today’s posting is review of Millionaire by Thirty:The Quickest Path to Early Financial Independence. The book is a joint effort by financial adviser and author Douglas Andrew and his two sons, Emron and Aaron.
Millionaire by Thirty is an unconventional book. Many of its recommendations fly in the face of traditional thinking about personal finance. In this regard, one is both intrigued with the content, but also somewhat put off – much like watching a street corner preacher or listening to a radical politician.
Parts of the book are very conventional – the Andrews argue for aggressive saving, budgeting, homeownership and building a good credit history. However, the authors perspective differs from traditional financial advice with respect to mortgage debt reduction and arbitrage. Gurus like Dave Ramsay and David Bach generally argue that mortgages should be eliminated, but Millionaire by Thirty says this is problematic because you’re left with a bunch of illiquid equity when you’re done with the obligation.
Instead of illiquid equity Andrews says you should be investing your equity into tax protected, safe, liquid investments that give a high rate of return. Sounds good, right? Well, according to them the assets meeting these qualifications are indexed universal life insurance policies. These are policies sold through insurance companies which involve a 5 to 10 year period in which you pay into the policy, then you are eligible to take distributions. The economic structure of the insurance companies, tax advantages and compounding will allow you to receive fat payments until your death.
The idea does fly in the face of conventional wisdom that says you should pay off your mortgage. – but, rather than coming from the far left of crazy, the idea that people should pay less on their mortgages and arbitrage the difference actually stems from a Chicago Federal Reserve study, not from Andrews. This hasn’t stopped him from being lambasted by a number of bloggers (1, 2, 3) who generally argue the approach is too risky.
My take is Andrews idea is interesting. However, its definitely is NOT for the faint of heart and it certainly isn’t for beginners. To successfully execute Millionaire By Thirty‘s main idea you’d have to thoroughly research life insurance companies, and develop expectations regarding the future of interest rates and real estate prices. To conclude, if you are new to personal finance, save the book for later. If you have more experience and like reading work by iconoclasts you might enjoy it. 
Best,
James
