How I Invest My Money

"Why do you invest?" This question holds the key to understanding not only how to invest but also what truly matters to you in life.

1. Investing Is Personal – There's No Universal Strategy

The way individuals invest their money reflects their personal goals, values, and priorities. Sandy Gottesman, founder of an investment firm, emphasizes asking potential hires a telling question: "What do you own, and why?" This question reveals that investment strategies are deeply tailored to personal circumstances.

Morgan Housel exemplifies this principle. Despite consistently rising incomes, he and his wife prioritize independence, maintaining the same modest lifestyle they had when they married. All their raises have gone into an "independence fund," enabling their future freedom.

The financial world operates much like medicine. Just as doctors recommend varying treatments based on a patient’s unique needs, financial advisors craft plans that meet individual goals. It’s not hypocrisy for mutual fund managers to avoid investing in their own funds – they design them for others, not themselves.

Examples

• Gottesman's interview process highlights personal variations in financial goals.
• Housel's "independence fund" shows how goals dictate investment decisions.
• Differences among fund managers illustrate unique strategies for different audiences.

2. Dividend Stocks Offer Steady and Growing Income

Dividend-paying stocks provide a reliable income stream while also allowing for growth over time. Jenny Harrington's relationship with her clients underscores this—their needs for both stability and gradual increases in income led her to pivot toward dividend investments.

Bonds provide a fixed, stable income but do not grow. In contrast, dividend stocks promise investors a stake in companies whose revenues—and dividend payouts—increase over time, ensuring sustained income growth.

Harrington often turns to stable, mature companies like IBM or Verizon, which have long histories of consistent profits. She also applies this strategy in niche markets, as in Douglas Dynamics, betting on long-term trends to accomplish consistent capital appreciation.

Examples

• Dividend stocks like Verizon and IBM provide consistency and growth.
• Bond-only strategies fail to address the increasing income needs of early retirees.
• Harrington's investment in Douglas Dynamics rides long-term sales cycles to continuous returns.

3. Investments Should Reflect Values

Dasarte Yarnway, founder of Berknell Financial Group, shows that values set the framework for investment. For Yarnway, time is the most precious asset. His parents, Liberian refugees, worked tirelessly, but he missed quality time with his father growing up.

To prioritize time, Yarnway invested in his own business, creating "equity in time" by freeing himself from rigid work schedules. He gained both financial autonomy and control over his life by becoming his own boss.

Yarnway also prioritizes servant leadership, seeking returns beyond financial gain. By inspiring his community and leading by example, he proves that wealth-building is not just about accumulating assets—it’s about pursuing a purpose and enabling others to thrive.

Examples

• Yarnway’s focus on his own company created financial freedom and personal flexibility.
• Childhood experiences of scarcity informed his time-first philosophy.
• His business model emphasizes inspiring and uplifting his community.

4. Simplicity Wins in Long-Term Investments

Ashby Daniels, a financial adviser, believes in keeping investments simple. Rather than chasing "optimal strategies," which rely on outdated data, he stresses the importance of focusing on long-term goals and patiently following a straightforward plan.

Daniels maintains a portfolio of 100% equities, accepting the short-term volatility for the potential of higher long-term returns. He emphasizes not tinkering with investments based on transient market movements, as this could harm overall performance.

By investing in diversified index funds, Daniels ensures broad market exposure. This reduces the risk of catastrophic losses while betting on overarching market growth over time.

Examples

• His 100% equity portfolio embraces volatility to achieve high returns.
• Avoiding impulsive changes minimizes risks of underperformance.
• Diversified index funds offer balanced exposure and stability.

5. Mistakes Are Learning Tools

Tyrone Ross’s journey from poverty to financial consultancy reveals how errors, if approached correctly, can lead to progress. Early in his career, ignorance led him to empty his 401(k) fund and overspend on expensive lifestyle choices, harming his credit rating.

Yet, these missteps set Ross on a path of financial education. Working at a chop shop taught him the fundamentals of the market, knowledge he used to secure positions at major firms like Merrill Lynch.

Eventually, Ross shifted strategies entirely, investing heavily in crypto-assets. As a young, single individual, he understood and embraced the risk involved. His evolving portfolio reflects how learning from failure can lay a foundation for success.

Examples

• Ross’s early 401(k) mistakes taught him the importance of long-term planning.
• Cold-calling at a chop shop introduced him to stock market mechanics.
• By embracing risky crypto-investments, Ross aligned his portfolio with his age and goals.

6. Letting Go Matters More Than Obsession

Joshua Rogers, CEO of Arete Wealth, sees overthinking as the downfall of investors. Constantly checking portfolios or clinging to bad investments leads to hasty or emotional decisions.

Rogers follows Deepak Chopra's philosophy: wealth is a gift meant to circulate. By embracing generosity and maintaining an open mind, Rogers avoids tunnel vision about losses and cultivates a sense of abundance.

This approach prevents him from clinging to bad investments for fear of loss. Instead, Rogers freely lets go of underperformers, focusing on opportunities that better align with his goals and values.

Examples

• Chopra’s analogy of financial flow versus "amputation" influenced Rogers's philosophy.
• Generosity toward others kept Rogers open to fresh opportunities.
• Quickly letting go of losses allowed him to refocus energy and increase gains.

7. Independence Through Frugality

Morgan Housel values financial independence so highly that he and his wife organized their lifestyle around it. They saved all salary raises and bonuses to build a buffer that would enable them to live freely later in life.

This emphasis on frugality and deliberate choices sets the foundation for their financial strategy. Aiming for independence later means maintaining discipline today, regardless of rising income or external pressures.

Housel’s approach highlights how thoughtful planning, paired with clear objectives, ensures long-term financial flexibility. This mindset prioritized future freedom over temporary indulgences.

Examples

• Lifestyle freezes maintained their goals of building an "independence fund."
• The choice to save every raise stems from prioritizing autonomy.
• Long-term goals replace the temptation of spending beyond means.

8. Growth Requires Long-Term Thinking

Jenny Harrington teaches that combining stability and growth in investments leads to effective wealth-building. Her move toward dividend stocks for clients with early retirement goals ensures they receive growing income streams beyond fixed returns.

By focusing on companies with consistent profitability cycles, Harrington tapped into growth while maintaining reliability. Her strategy involves researching businesses like Douglas Dynamics, which thrive over eight-year cycles, to guarantee client returns while securing growth.

Investing for growth means anticipating future needs and not just solving immediate problems, ensuring security for years to come.

Examples

• High-quality dividend stocks outperform bonds due to income growth.
• Harrington's strategy balances income needs for retirees under 60.
• Research-informed decisions ensure both appreciation and stability in returns.

9. The Market Can't Be Controlled

Ashby Daniels and Joshua Rogers agree: markets can’t be fully predicted or controlled, so focus should remain on what’s truly important. Rogers avoids obsessing, while Daniels stresses patience as a key strategy to finish one’s long-term financial "race."

The financial landscape is unpredictable, but avoiding emotional reactions—whether fear or greed—minimizes losses. Clear goals and staying the course prevent underperformance caused by panic-driven decisions.

Acknowledging the lack of control frees investors to prioritize strategies aligned with personal contentment rather than pursuing impossible perfection.

Examples

• Patient equity-focused approaches rely on market averages over time.
• Letting go of constant surveillance improves emotional well-being.
• Accepting losses helps investors refocus on remaining wins.

Takeaways

1. Clarify your personal values and tailor your investments to reflect those goals—whether it's independence, time, or growing wealth.
2. Research and understand asset classes before committing to them—for example, weigh the stability of bonds against the growth potential of dividend stocks.
3. Embrace patience, avoid emotional decisions, and remember that sometimes avoiding action is the best course for long-term rewards.