Learning From Literature

How I Invest My Money by Joshua Brown and Brian Portnoy

Cover of How I Invest My Money by Joshua Brown and Brian Portnoy

How I Invest My Money: Finance Experts Reveal How They Save, Spend, and Invest by Joshua Brown and Brian Portnoy is a personal finance book published in 2020.

While people listen all day to financial experts lecture on the best investments right now, nobody thinks to ask them where they invest their PERSONAL money. For example, about half of all US mutual fund portfolio managers do not invest a dollar of their own money in their funds. 

In this book, 25 financial professionals were asked how they manage their finances. Each expert wrote a 3-10 page chapter depicting their mindset regarding money and investing (so it is an easy read).

The differing perspectives show that while all experts agree upon some basic principles, there is no single “right” way to handle your money. One example is Morgan Housel, who describes owning his home without a mortgage as “one of the worst financial decisions we’ve ever made and one of the best money decisions we’ve ever made.” He explains, “the independent feeling I get from owning a house outright far exceeds the known financial gain I [could] get.”

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Enjoy!

Table of Contents

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Ch 1 – Morgan Housel 
  • Author of The Psychology of Money
  • Independence, at any income level, is driven by your savings rate. And past a certain level of income your savings rate is driven by your ability to keep your lifestyle expectations from running away… Despite more than a decade of rising incomes – myself in finance, my wife in healthcare –  we’ve more or less stayed at [the same] lifestyle ever since
  • Most of what we get pleasure from – going for walks, reading, podcasts – cost very little so we rarely feel like we’re missing out
  • Every investor should pick a strategy that has the highest odds of successfully meeting their goals. And I think for most investors, dollar-cost averaging into a low-cost index fund will provide the highest odds of long-term success
  • If you can meet all your goals without having to take the added risk that comes from trying to outperform the market, then what’s the point of even trying?
  • My investing strategy doesn’t rely on picking the right sector, or timing the next recession. It relies on a high savings rate, patience, and optimism that the global economy will create value over the next several decades
Ch 2 – Christine Benz 
  • A streamlined, low-cost, and utilitarian portfolio is the way to go… so that we can stay focused on what matters most to us: working in careers that we find rewarding; pursuing our shared passions of music, food, and travel; being engaged in our community; and staying close to family
  • I think that being financially compatible with your partner is a hugely under-discussed factor in financial success
  • We both know that markets move in cycles, so we’ve never gotten bothered during the normal downturns that happen
Ch 3 – Brian Portnoy
  • True wealth… is the ability to underwrite a life that is meaningful to me
  • In a successful money life, investing is the easiest part – if you can cut through the noise. The crux of money life starts with the other things: first earning, and then spending, saving, and borrowing 
  • Tracey and I have been disciplined in our spending, not because of a rigorous budget, but because we don’t covet the big ticket items (cars, jewelry, wine, art) 
  • My takeaway after two decades of having a backstage pass to the best fund managers in the world is: nearly all of us nearly all of the time should own stock and bond index funds (or ETFs), allocate to them in reasonable proportions, and then get on with life
Ch 4 – Joshua Brown 
  • Almost everything I do is with a long-term bias. I don’t day trade or swing trade
  • When people disagree with you about a stock or a sector bet, there’s a very simple way to resolve the conflict – time
Ch 5 – Bob Seawright 
  • Humans generally lack courage more than genius, and persistence most of all. Accordingly, sticking with our financial plans is often more difficult than creating and implementing a good one
  • Our decision-making systems default towards immediate, tangible rewards, which means we are prone to short-change and to ignore investments in intangible, longer-term initiatives
Ch 6 – Carolyn McClanahan
  • I was taught to invest in myself… Another gift my family gave me early on was the joy of reading
  • Our spending is about what we value in life – experience, charity and convenience. There is not much outlay for consumer goods
  • The most important determinant of financial independence was not how much you save – it is how much you spend
Ch 7 – Tyrone Ross 
  • I emptied out [my 401k] to waste it on living expenses.. Buying lots of gaudy jewelry, a nice car, destroying my credit,  and spending everything I made
  • When… you are blessed enough to acquire financial knowledge, it’s important to pass it on
  • I can sum up my investing history with: failure pays the best interest 
Ch 8 – Dasarte Yarnway
  • Most of who we are and what we value can be traced through how we decide to invest our dollars
  • The intersection of my time and values provides a compass for how I should invest my dollars. To be clear: If I value a particular thing, person, or place, I want to invest my money there. If I am also spending a significant amount of time on said thing, person, or place, I will also consider investing there. If something buys back time, I’ll certainly invest my money there, because then I can reinvest the free time on more of what I value
Ch 9 – Nina o Neal
  • I view the stock market as an incredible tool for reaching long-term financial goals that requires careful management and a highly disciplined approach to investing
  • I… like the benefit of dollar-cost averaging through monthly contributions. I prefer to invest in mutual funds and exchange traded funds
  • The biggest return on investment is my happiness and the ability to love what I do without a corporate agenda or sales goal
Ch 10 – Debbie Freeman
  • I invest every month, regardless of market conditions… it is a mixture of ETFs and mutual funds
  • Higher education was the greatest investment I ever made
  • Life is not just about the next big milestones. It is also about enjoying the moments in between
  • Be consistent and disciplined with your long-term goals
Ch 11 – Shirl Penney
  • We have four broad categories or pools of capital as we think about it. They are personal capital (Mary Anne and myself), family capital (our two daughters and nieces and nephews, etc), philanthropic capital (we focus on education, ALS, and helping military families), and our “fun” capital bucket (assets we like to enjoy but are not fixated on financial return)
  • We invest in a diversified portfolio consisting of index funds in the core part of the portfolio
Ch 12 – Ted Seides
  • I never had a financial plan back then, and I wish I had… A financial plan and a good financial planner would have given me peace of mind and may have helped me make better decisions along the way
  • When my life is cash flow positive and I leave a buffer in cash to protect against lean years, I feel a sense of stability and can freely invest the remainder of my assets with a long time horizon
  • I’m comfortable with equity market volatility, and I don’t believe in market timing, so I stay fully invested
Ch 13 – Ashby Daniels
  • I believe common excesses often complicate life rather than make it more fulfilling… I never want the things I own to end up owning me.
  • Few people discuss the impact lifestyle choices can have on their financial future, but I believe it will account for about 80% or more of our personal financial destiny
  • Anything that reduces short-term volatility must also reduce long-term return. Given this fact, it seems illogical to earn anything but equities assuming we have the emotional fortitude to think truly long-term
  • I believe the quest to squeak out a few extra basis points of return is a waste of time for the typical Main Street investor, myself included
  • Attempting to beat the market must also introduce the risk of under performing the market as well. If we don’t need to beat the market to achieve our financial goals, what sense would it make to introduce the possibility of moving us further from our goals
  • If our goals require beating the market, I believe we should revise our goals rather than attempt to do something that introduces other risks
  • I believe being willing to stick to a diversified portfolio of index funds is the closest thing to an investing superpower that exists in the age of shiny object syndrome. Patience seems to be a much simpler and more satisfying road to our financial goals than always trying to find the next best thing
  • I’m a big believer in insurance…Insuring ourselves for what can go wrong is what allows us to invest for what can go right
  • Understanding what matters most to us and what we are trying to achieve provides the goalpost for establishing our strategic and tactical plans that allow us to sleep well at night
Ch 14 – Blair duQuesnay
  • Common money scripts include “Hard work earns money,” “Inherited wealth is bad,” or “Poor people are lazy.” … Understanding our money scripts can remove obstacles to achieving our financial goals in life
  • Trying to beat the market is a losing proposition. In golf, par is a good score, and avoiding bogeys is more important than making birdies. Very few professional investors beat the market consistently, after accounting for the costs. The most important takeaway… is that the market return is a good return. The proliferation of low-cost index funds means that the market return is ours for the taking, if only we accept it. I have not purchased an individual stock since
Ch 15 – Leighann Miko
  • It isn’t until we truly discover what is most important to us that we can take meaningful action to live into that truth
  • Future me will really appreciate present me not giving into instant gratification, especially when my values do not align with the purchase
  • Gaining a deeper understanding of what’s really important to me has given me more control over how I spend my money, or rather don’t spend it
Ch 16 – Perth Tolle
  • I see my personal investments as tools to be used in service of [my] mission
  • I hold the most low-maintenance instruments possible, such as ETFs and index mutual funds
  • My investable assets can be divided into four goals/buckets (and the asset allocations within each)
  • Short term/emergency funds (100% money market)
  • General investing and cash for investment opportunities (50% stocks, 50% cash)
  • Retirement (90% stocks, 10% bonds)
  • Charitable giving (20% stocks, 80% bonds)
  • Investing can be a form of expression
Ch 17 – Joshua Rogers
  • People who are overly obsessed with their personal investments (e.g., watching their portfolio 10-20 times per day or similar) may achieve decent results in the short or medium term, but long term they tend to self destruct by being too close to it, too emotional, and too tight-fisted about their money
  • Everyone should have a financial advisor if for no other reason than to have a sounding board who is less emotional about your money than you are
Ch 18 – Jenny Harrington
  • I don’t even own shares in my brother’s hugely successful ice cream company, because I refuse to risk my personal relationship with him over money
  • I grew up in a financially volatile household and witnessed the downside of counting on possible big wins as justification for living above the means
  • I do also invest heavily in myself
Ch 19 – Michael Underhill
  • I learned early on there was incalculable value in hard work, grit, and being self-sufficient by living on your cash flow
  • The performance of individual securities is unpredictable, period. The performance of portfolios of securities is unpredictable on any short-term basis
  • Inflation of 2% a year for 30 years reduces your purchasing power by 45%. Inflation therefore brings “longevity risk” into play for all investors – this being the likelihood that one will outlive one’s financial resources
Ch 20 – Dan Egan
  • My biggest asset right now is me, my time and effort, and how I spend it… this is where I invest most of my attention
  • Invest… in a low-cost globally diversified portfolio of ETFs
  • A large part of my approach to money is in reaction to this: your money is a wonderful servant and a terrible master. You should only care as much about money as what joy it can bring or pain it can remove. Otherwise, give it as little attention as possible
Ch 21 – Howard Lindzon
  • Charlie is my financial advisor when it comes to market asset allocation. We talk as business partners at least once a week about the markets and about allocations once a month. Charlie uses low cost ETFs (Vanguard, Schwab) for building client portfolios
Ch 22 – Ryan Krueger
  • The greatest trick the devil ever played on investors is making them think that it is the investing part that matters the most. The working part moves the needle more
  • The most important piece of my entire life puzzle was not planned, but incredible luck – my wife agreeing to marry me. She is not interested in money, never has been. She is fully invested in raising our five kids
Ch 23 – Lazetta Rainey Braxton 
  • My very first investment was in me… Building my human capital served me well
  • I am a staunch believer in index investing as the core investment and satellite investments to include real estate, stocks, and business ownership
  • We are grateful that our values align and that we set the foundation for financial flexibility from the very beginning
Ch 24 – Marguerita Cheng 
  • The most valuable advice that my dad instilled in me it was not to defined myself by what I have, but rather my accomplishments and education
  • Money should not be the sole determining factor for the decisions made in life
  • While money [does] not buy happiness, it [does] provide peace of mind, freedom, and flexibility
  • If you do not prepare for “what if” scenarios, it does not mean they will not happen
  • Sometimes, I think people make things more complicated than they need to be… I believe in a simple trifecta of dollar cost averaging, tax-free growth and the time value of money
  • We would not dream of raising illiterate children, so why is financial literacy any different?
Ch 25 – Alex Chalekian
  • Wealth means different things to different people. But for me, after watching my family struggle for years, it means having financial independence… Wealth now means health, time, and options
  • Dollar cost averaging might be boring, but it works for investors
  • Passive investments like ETFs and index funds are my preference in my retirement accounts
  • Money is just a means to an end
  • Take the time to discover what wealth means to you. Once this is crystal clear and you have the blueprint, start laying down the foundation to a happier future
Conclusion – Main Ideas to Remember
  • Money scripts (unconscious beliefs about money) likely weigh more heavily in our decision-making than mathematical analysis
  • There are many different ways to invest and build wealth. However, some fundamentals are crucial to adhere to: saving smartly, borrowing wisely, and spending prudently
  • If you can meet your goals without taking more risk, then it makes no sense to introduce risk unnecessarily and possibly move further from your goals (specifically referring to beating the market but also applicable to other things). And if your plans do require beating the market or other excess risk, you should revise your goals rather than attempt to do something that introduces other risks
  • Money can buy happiness through the creation of opportunities that comes with financial flexibility
  • Money is an expression of our values and our identity; our saving and spending habits reflect ourselves
  • Investing in human capital (yourself and others) is incredibly important and can often be the most fulfilling and influential investment out of all
  • Leaving your children with the gift of financial literacy is one of the best contributions you can give
  • Stopping your lifestyle expectations from rising is one of the most important things to build wealth faster
  • Money is a tool to be used to meet your personal life goals
  • You should define goals and values, split your money in different categories as it applies to these goals, and invest/allocate resources accordingly (usually in index funds or ETFs)

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