Retire With Dividend Growth: A Better Way is the second book from Dan Mac where he enlists the steps for the readers in order to ensure a good and comfortable retirement plan. Dan Mac runs the blog at Dividend Growth Stock Investing, and provides some great reading material on a regular basis.
The book starts off with presenting the case for dividend growth investing while pointing out some flaws in William Bengen's 4% rule and why dividend growth investing is a better strategy. As readers of my blog know, I am a big fan of dividend growth stocks...maybe it's confirmation bias, but I agree with the listings made by Dan Mac on why retiring on income produced by dividend growth stocks is better than other strategies. An excerpt from the book on the limitations:
• The biggest concern with the 4% rule is that you will run out of money when you most need it. You shouldn't accept the possibility of running out of money when there is another strategy that can almost guarantee you never run out of money.
• Following the 4% rule requires you sell more of your investments when they are undervalued and sell less when they are overvalued. When investing, this is the exact opposite of what you want to be doing. There is a better way in which you will be making smarter investment decisions.
• If you want to leave an inheritance behind, the 4% rule reduces quite drastically the amount you will be able to pass on. Why work so hard your entire life creating a nest egg and then not be able to leave anything behind to your loved ones? There is another strategy that will have your family thanking the heavens that you were such a financially astute investor.
Why Read This Book?
Financial education and planning for your retirement is an important aspect of life that is missing from the education system. The onus is left on you, as an individual, to teach yourself how to plan for the long term and build an investment portfolio to provide during the golden years of your lives. Books like the one in question are a great way for people to get introduced to the idea of long term planning and think about investments and take matters into their hands instead of hoping that the government would take care of their retirement via pensions.
This is an easy book to read and understand. The book also provides a chapter-by-chapter exercise to follow and work out the numbers for each reader's case. The reader is walked-through with the whole planning process of determining estimates, creating shortlists of stocks and which metrics to use, account types, asset allocation with extra notes on a balanced portfolios, emergency funds, when to sell stocks etc.
Dan Mac also importantly notes that the maintenance of the retirement plan involves minor adjustments as a life-long process. The book wraps up with steps to take care of, when it's time to retire - with a good discussion on tax planning for your sources of income; and managing the portfolio during retirement and passing on the fortune to your children.
For long-term investors, I recommend this book as it provides with some good overview of investment strategies and things to keep in mind while building your portfolio. However, if you are a seasoned dividend growth investor, a lot of the information may come as something you are already familiar with. The book also takes a very education-oriented approach, so other dividend growth investors can learn a thing or two about how to educate others about dividend growth.