I love all things money. My kids often see me reading finance books and browsing real estate blogs. They hear me talking about money with my wife. They watch us negotiate deals to buy houses with cash, and they overhear our discussions on retiring early.
I explain what I’m doing with money in simple terms to my kids, but I can’t be sure it’s sinking in. They are 10 and 6. It is my job to prepare them to navigate money and life. I wonder how I’m doing.
How does one get a perfect credit score? I’m in the military. People around the office ask me for for financial advice. They know I’m a “money guy” and word gets around that I like talking investing and real estate.
I warn people they won’t like my advice. They usually don’t.
This guy didn’t.
Recently a co-worker told me he’s got $20,000 burning a hole in his pocket, and what I think about investing in the British Pound. With the Brexit, it seems like a sure thing!
I told him this kind of speculation in currency isn’t for everyone. Even those who devote their lives to studying this are wrong more often then right. I warned him this would be a fun way to lose money quickly on something he doesn’t understand. It seemed like he took that to heart.
Guy: “Ok, I got a better idea! What about gold!?!?!?”
Think you are good at picking stocks?
To illustrate how un-awesome you are, let me first share how awesome I am.
When I was just getting started out investing in 2001, I put all the money I had, $4,000, into an index fund. I called my bank and said put it in the S&P 500 index. Warren Buffett taught me well.
The savvy salesmen on the other end of the phone who was clearly more experienced than Warren told me I was crazy to invest in that. I could make money twice as fast if I invested in their aggressive growth fund.
NOW I’M AWESOME!!!!!!
Yes, I may have done something stupid.
I certainly did something unique.
I sold all the investments in my IRA and bought rental properties! (My Wife’s too!)
The rental properties are held in the Roth IRA as investments, and the rental income accumulates as cash inside the IRA.
And I’ll show you how it made me FILTHY RICH!!!
I did it, and you can too!!!!!
I’m going to reference two awesome books in this post. They are must-have’s if you want to know money. They are books by finance blogger Jim Collins (http://www.jlcollinsnh.com) and a trader turned probability expert and essayist, Nassim Taleb.
Why would I talk about both of these books in the same post.
Simple.
Reading both gives you almost everything you need to understand money. Damn close anyway.
Jim Collins book The Simple Path to Wealth has a section I love where he compares the stock market to a glass of beer. These glasses contain different amounts of beer and foam.
If you use a little skill to pour the beer, you can have a glass full of mostly beer with very little foam on top.
Pour the beer too quickly, you’ll have mostly foam and very little beer.
What if somebody else pours your beer into a mug that you can’t see through and then hands it to you. You have no way of knowing how much is beer and how much is foam.
The same problem exists with the stock market.
This post is based on and inspired by ideas from the book Fooled by Randomness by Nassim Taleb. It’s one of the most insightful books I’ve ever read. It’s about the role of chance in life, and how we are often blind to and fooled by it.
Get it and read it.
It ESPECIALLY applies to money and the markets.
The points I make in this post are derived from his book. Here we go:
Have you ever played Russian roulette?
I have.
I’m kidding. I haven’t.
Why not?
Because that’s stupid!
Because as exciting as it sounds, I just can’t stomach the worst possible outcome. It’s not an acceptable risk. Not even to play once.
No matter how smart I am (or how smart I think I am), the outcome is ruled by randomness. By chance.
First, a little about me and my website:
My website is all about helping others to get out of debt and create passive income from real estate.
But you can not mess with real estate until your finances are straight. You gotta go get Jim’s book! (or at least read his website)
“Spend less than you earn–invest the surplus–avoid debt”
The central theme of Jim’s website and book.
It’s hard to believe the Path to Wealth can be this simple.
But in his book, you’ll see it is.
I got to admit. I love this book! My review is going to sound a little over the top, but it’s a damn good book!
I’ve been big into finance and real estate books my whole life. I’ve read them all.
Ok, way more than this!
About a year ago, I stumbled across financial independence and early retirement websites and it opened up an entire new world to me!
I began seeking out all the top blogs in this field, and one that kept coming up was jlcollins.com.
To put it bluntly, his Stock Series was the most comprehensive explanation of investments I have ever read. There is so much noise and confusion out there in the finance world, and he slices right through it and tells you what’s really important.
He makes it easy to understand the complex world of money. His approach to investment is so simple, it’s alarming!
I followed his blog closely and eagerly awaited new posts.
When he sent out an email explaining he was writing a book and soliciting help from his readers for proofreading, I jumped at the chance!!
The only reason I volunteered was because I wanted to read the book ASAP!!!
As luck would have it, I was selected to be a proofreader, and had the opportunity to read the book before publication. (Actually, I’ve read it about 20 times. Occupational hazard!)
The book is exactly what I was hoping it would be.
I’ll show you exactly how I paid off debt and built wealth.
Among acquaintances, friends, and co-workers, my thoughts on money seem extreme. I don’t have many among those groups to share and discuss with.
I’ve been devouring books about money my whole life. I was soooo happy when I found the world of FI, real estate, and investing blogs. I feel like there is a community of people out there that understands me. They understand how important it is to payoff debt immediately.
When I was in college, I got a job at Fidelity Investments as a stockbroker. It was a 3rd job, a side hustle to payoff my student loans. It was a great introduction to the world of finance. It made sense for someone like me to get a job like this. I’ve always had an interest in the stock market.
My name is Rich. I like to talk about money.
Let me tell you a story.
How do you summarize your financial life in a blog post?
What if it’s your first post ever?
I’ll give it a shot!
I met my wife in college and quickly realized she was the right person for me. Before she married me, she asked me a question that I didn’t know the answer to. It was a question that I didn’t want to know the answer to. (We are recently divorced, but still have a great relationship)
“How much money do you owe in student loans?”
(Very blank look from me)
Thinking back over the last 3 1/2 years of college, I remembered getting some grants and a partial scholarship from the military for majoring in Chinese, how bad could it be? I remember taking out a few student loans to help make ends meet (a.k.a. always eating out and vacations with rich friends).
Read moreMy Wife Knows Money – The Financial Summary of my Life