Getting Personal

Adam M. Grossman

I’D LIKE TO TELL YOU about a unique new book. How I Invest My Money is a compilation of personal money stories shared by 25 investment professionals. The book takes its title and inspiration from a 2019 blog post by investment advisor Josh Brown, a widely followed author and TV commentator.

Brown’s motivation: After years of on-air commentary, discussing every conceivable financial topic, it occurred to him that no one ever asks investment people how they invest their own money. It seemed like an odd omission. To address this gap, Brown teamed up with Brian Portnoy, another well-known industry voice.

The result is a unique window into the financial life—and, more important, the financial thinking—of some of the most thoughtful people in the industry.

While these 25 individuals are all different, what’s striking is that many of them echoed similar themes and described similar strategies. Most notably, in a book that’s the collective work of investment professionals, there is very little discussion of investment strategy per se. How I Invest My Money is definitely not a textbook. Instead, it’s a mosaic of how real people run their financial life.

And real people, even when they work in finance, don’t always adhere to the textbook. One contributor, Leighann Miko, put it this way: “[C]ontrary to popular belief, it’s okay to make decisions that don’t make sense on paper.” Advisor Bob Seawright talked about purchasing a summer cottage in the Adirondacks. From a strictly financial point of view, he wrote, “It’s a lousy investment.” But he sees it as an investment in his children and grandchildren. In that sense, he said, it’s “the most important financial investment we’ll ever make.”

Contributor Ryan Krueger may sum it up best: “I wonder if the greatest trick the devil ever played on investors is making them think it is the investing part that matters most.”

It’s an excellent point. All too often, finance is presented through the lens of numerical analysis. Finance people use terms like efficient frontier, alpha and beta. To be sure, they’re useful concepts and, of course, everyone wants to see their wealth grow. But these concepts are one dimensional at best. The reality is, most people are also—and maybe primarily—working toward happiness and contentment.

Often, this means using money in ways that don’t optimize every dollar the way that an economics textbook would dictate. Co-editor Brian Portnoy talks about the decision to pay off his mortgage. He acknowledges that it may not have been the optimal decision based on the numbers. But, he states flatly, “I don’t care.” Why not? Because he enjoys living without debt—and that’s reason enough. On a similar note, Morgan Housel writes, “Our goal isn’t to be coldly rational; just psychologically reasonable.”

Even within their investment portfolios, none of these practitioners adheres too rigidly to any orthodoxy. Yes, they each have an investment philosophy, but they also accept the reality that there is no single “right” way to invest. One contributor, who normally advocates a conservative, dividend-focused approach, allows that she may own “a rogue position in Facebook” and “maybe a few shares of Twitter.” Similarly, co-editor Josh Brown, who generally advocates index funds, also owns individual stocks and happily invests in funds launched by friends—for the simple reason that “I believe in supporting my friends.”

Along these same lines, several contributors talked about their decision to invest early on in a new exchange-traded fund created by Perth Tolle, herself also a contributor to the book. Tolle’s unique emerging markets fund (ticker: FRDM) weights countries according to measures of economic freedom and human rights.

How I Invest My Money may be most helpful to readers in areas that traditional textbooks don’t address at all. This includes, for lack of a better term, how to organize one’s money. While academics frown on the concept, Brian Portnoy writes that “mental accounting is my friend.” He organizes his assets into four buckets: broad-market indexes, cash, real estate and “lottery tickets.” Advisor Nina O’Neal employs a set of online bank accounts to keep organized—one each for “taxes, tuition, general savings, etc.” Contributor Debbie Freeman does the same thing, with regular contributions to an account for “a dream vacation when I turn 40.”

These examples illustrate that an often-overlooked contributor to financial success is simply getting organized. “Getting organized” isn’t an end in itself. Rather, organizing your financial life allows you—and even forces you—to think more carefully about investment strategy. When your money is segmented by purpose, it’s much easier to assign each segment an appropriate strategy. How I Invest My Money provides several useful templates.

Though this book is the work of finance professionals, its audience is everyday investors. Making it especially approachable: Each chapter includes an illustration by Carl Richards, the Sketch Guy from The New York Times.

How I Invest My Money is a collection of ideas and not necessarily an actionable field guide. Some might view that as a weakness. But at its core, that is precisely the book’s message. Yes, you should use your money wisely. But there are many roads to Rome. You shouldn’t worry if you want to use some of your funds in ways that others might deem emotional, idiosyncratic or inconsistent.

“Life isn’t always consistent,” Josh Brown says, and that’s okay. “Success in life,” Christine Benz writes, “is all about finding balance.” I couldn’t agree more.

Adam M. Grossman’s previous articles include Sweat the Big StuffEmerging Concerns and Look Under the Hood. Adam is the founder of Mayport, a fixed-fee wealth management firm. In his series of free e-books, Adam advocates an evidence-based approach to personal finance. Follow Adam on Twitter @AdamMGrossman.

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