Josh Brown and mates inform you what they’ve in a brand new funding e-book
In my 23 years as the on-air correspondent for CNBC, I have been asked a lot of questions by strangers, but most of them limit themselves to a twist on “What do you think will happen to the markets?”
Remarkably, almost no one (OK, maybe one in a hundred) has ever asked what I think is the most relevant question: “What do YOU own, Bob?”
Josh Brown had the same problem. A successful money manager, chief executive officer of Ritholtz Wealth Management and on-air employee at CNBC, Brown noted in the introduction to his new book “How I Invest My Money: Financial Professionals Reveal How They Save, Spend and Invest”. that he’s been on television for a long time (9 1/2 years), “and in all this time no person has ever asked me what I do with my money. None.”
Impressive. That’s worse than one in a hundred.
After his friend Brian Portnoy, founder of the financial wellness platform Shaping Wealth, wrote an article entitled “How to invest my own money” on The Reformed Broker’s blog, he approached him and a simple idea came up: Let’s turn to financial advisors we respect and ask them the same question.
Genius. And so “How I Invest My Money” was born.
Time and again there are common themes in the representation of everyone’s wealth: low debt, frugality, aversion to buying luxury goods, index investments, College 529 plans, Roth and Simple IRAs, charitable donations, regular contribution to retirement assets ( most contribute 10% or more of their income).
Here are the recurring themes:
Many investment professionals are not in love with investing.
This is true. Most see it only as a means to an end. Christine Benz, Director of Personal Finance at Morningstar: “I’ve found that I’m passionate about investors, and most of them aren’t passionate about investing. Rather, they see investing as a means to an end – a way to get college for theirs Paying children or finding financial security in retirement. “
Many investment professionals who employ stock pickers invest their money in passive funds.
Brian Portnoy: “Almost every one of us should almost always own equity and bond beta index funds (or ETFs), allocate them in reasonable proportions, and then get on with life.”
Morgan Housel, a distinguished investor and partner in the Collaborative Fund, “For most investors, averaging the dollar cost of an inexpensive index fund is the best chance of long-term success.”
Perth Tolle, founder of Life + Liberty Indexes: “For the most part, I hold the lowest maintenance instruments like ETFs and index mutual funds. I have skin in the game: I am extremely overweight and freer emerging markets in the US ETF based on my own index.”
The endless attempt to beat the markets is exhausting and not worth it.
Ashby Daniels, Shorebridge Wealth Management: “If our goals call for beating the market, I think we should revise our goals rather than try to do something that involves different risks. Market returns should be good for our needs to be enough.”
Many investment professionals do not invest with their clients.
Morgan Housel: “Half of all US mutual fund portfolio managers don’t invest a penny of their own money in their funds, according to Morningstar.”
Ted Seides, Founder of Capital Allocators LLC: “During my time managing hedge fund portfolios, I was limited to what I could own and invested most of my capital with my clients. Those investments were for me extremely sub-optimal. Hedge funds are generally tax inefficient and take less risk than I wanted. “
It’s not about picking stocks, it’s about saving.
Morgan Housel: “The main thing is to keep your expectations in check and live below your means. Independence at any income level is determined by your savings rate.”
Ashby Daniels: “It will not be the fund decisions or other critical decisions that determine our success. It will be our ability to live far below our means.”
And keep track of what you’re spending.
Carolyn McClanahan, Founder of Life Planning Partners: “I learned that the most important determinant of financial independence is not how much you save, but how much you spend.”
They all own their homes.
Joshua Brown: “Most of my net worth is in my house with no mortgage.”
Joshua Rogers: “In my experience, real estate is the second most reliable way to build wealth over the long term.”
And their biggest investment is usually their own business.
Joshua Rogers, CEO of Arete Wealth: “My greatest asset and single investment is my own business.”
They don’t buy a lot of expensive stuff.
Ashby Daniels: “I believe that shared excesses often complicate life instead of making it more fulfilling. As they say, I never want the things I own to own me. I never care about expensive watches, high- End cars and the minded The Biggest House or something, so I’m sure it’s easier for me to get a grip on this idea than it is for others. “
They don’t like a lot of debt.
Ashby Daniels: “We are not fans of debt and pay cash for almost everything, including cars.”
You don’t worry about a few basis points.
Ashby Daniels: “I think finding some extra base returns is a waste of time for the typical Main Street investor, including me.”
Focus less on fees than on taxes.
Joshua Rogers: “Worry less about investment fees than about taxes. Taxes charge your investment anywhere from 20% to 35%. Fees, even in their most egregious form, will never exceed 5%.”
Many were poor. Money has always been a problem.
Ted Seides: “Money wasn’t abundant and it was a cause for concern for my father, despite my youthful impressions.”
Lazetta Rainey Braxton, Co-CEO of 2050 Wealth Partners: “When we were growing up, money was tight and there was no financial investment.”
A lot of emphasis is placed on having fun now.
Josh Brown: “I have to weigh the need to put money away for my children when they are older with the desire to do things for them now, like family vacations.”
Debbie Freeman, director of financial planning at Peak Financial Advisors: “The final component of my savings and investment habits is my all-time favorite. It’s my monthly deposit into an online savings account for a dream vacation when I turn 40.”
Most try to keep it simple.
Ashby Daniels: “We have three primary financial goals:
1. Prepare for retirement;
2. Pay for college for our two sons and
3. Prepare for the what-ifs of life. “
Finally, you shouldn’t pay too much attention to financial advisers. If they’re so smart then why aren’t they all rich?
Joshua Rogers: “It’s a recognized fact in the industry that at least 75% of professional financial advisors are cobblers whose kids don’t have shoes. Wall Street is the only place where people who drive Toyota Camrys are people who have Bentleys advise how to handle their money. “
Wait – one more thought. The most important investment is you, not stocks.
Lazetta Rainey Braxton: “My very first investment was in me.”
“”How I Invest My Money: Financial experts show how to save, spend and invest“Joshua Brown and Brian Portnoy, editors. Harriman House, 2020.