Rule One Investing Blog

Phil Town released his second ‘financial freedom’ book in early 2010 named Payback Time. This book is basically a continuation of the Rule #1 book. In general, I thought this book was really good. As with Rule #1 it provides simpler explanation of concepts that are barely discussed or discussed in complex detail. The simpler explanations and real-world example (as in Rule #1) makes this a book that most people can relate to and use.

Unfortunately, you need to read Rule #1 prior to reading Payback time. As well, at times, I felt that this could have just been added to Rule #1 since it is referenced many times. Therefore, if you are considering this book than buy both Rule #1 and Payback time and read away.

The basic premises of the book is to “stockpile” stocks by buying when the market is low and selling when they are overvalued (high). Although this sounds like the same thing as Rule #1 this book concentrates on investing rather than trading. Rule #1 teaches you how to jump in and out of the stocks based on the trends using a great company as your basis. This book teaches you to buy a great company as if you were going to own it forever and keep on buying it at whatever price as long as it meets your “stockpile price”.

As with many investing and self-help books a large part is selling you on their system. This is no different with Payback time, however, Phil does back up his advice with numbers and provides an alternative (index funds) if you’re not going to follow his advice. Chapter 2 breaks down why Mutual funds are a terrible idea and how you should consider moving your money elsewhere.

The gold of the book is Chapters 3-6 so I will provide a brief review of each chapter.
Chapter 3 is a higher level review of Rule #1. This is quick refresher and does not provide the same detail with the numbers.
Chapter 4 introduces the Sticker price and Payback time. Both of these concepts are pivotal to successful investing with this strategy and can’t hurt learning for future reference.
Chapter 5 provides the steps required to start investing with the Payback time method.
Chapter 6 provides a quick guide to using floors and ceilings to have an idea when to enter the market.

Overall, this book provided simple explanations, a method that works and made me consider my investing future. If nothing else a book like this allows you to reconsider how and where you are investing your money and if this is the best option.

My recommendation: Read it!