We’ve covered a lot of ground together, and I hope you have learned a lot of useful information that you can take forward in life. I hope that you can sleep well at night knowing that your financial house is in order and that your retirement is secure. Here is where I start to sound a lot like a college professor: Your financial education is an exercise in lifelong learning. You will not achieve your potential if you do not continue to learn how money works and how to make it grow. I encourage you to go back through this book and study each topic in more depth. I encourage you to truly master these concepts by going far beyond my limited presentation here, and consider my comments as merely a foundation for real financial mastery.
I am at a stage in life that my “golden” years are not impossibly far away. Retirement is visible on the horizon, and I am desperately trying to fix the mistakes of my misguided youth. I was conversing with a colleague about retirement issues the other day, and we both sadly agreed that we wish we knew “back then” what we know now. We would have made different choices. This colleague is a social worker and has a deep dedication to helping others. He is among the most selfless individuals I know. We both realized that we had a warped view of wealth.
We had adopted the basic assumption that wealthy people got that way by being greedy and building financial empires on the backs of other people. That dark path does exist, and we all know examples of people who did get wealthy in that selfish (and unethical) way. I don’t suggest that wealth building should be the single driving force in your life, but there is nothing wrong with not being poor. Another way to view wealth is that it empowers you to help others. It provides security for you and your family. It provides quality health care that can give you and your loved ones a longer, healthier life. If you are good at generating wealth, you can do incredible good in the world. Find the Gates Foundation website and see what they are up to if you do not believe me.
When you grow up poor and live in a poor community, you are not exposed to critical information about how to become wealthy. It often never occurs to you that you could actually be wealthy. You have no examples; no role models guide you on your path. What role models we have from popular culture mean that many youths want to be rap stars, football heroes, and famous actors. I encourage you to find financial heroes. I’ve repeatedly mentioned some of mine in this text. Jim Cramer teaches and entertains every night on Mad Money, and is among the most animated stock pickers you will ever encounter.
Warren Buffett gives many interviews and writes an annual shareholder newsletter. What Buffett says literally moves markets. Follow Jim on Twitter. Turn on CNBC while you brush your teeth in the morning. Read the classic books by Peter Lynch and Benjamin Graham. Become a financial detective and see if you can figure out what Ray Dalio is up to. Dedicate a little time every day to financial mastery. The more you learn, the better decisions you can make, and the more opportunities you will be able to spot and take advantage of in life. I do advise picking your financial role models carefully; most the talking heads on TV and the hordes of “experts” you will encounter online have proven that they can “talk the talk,” but have yet to “walk the walk.” Seek to emulate the Titans of Finance. They have proven that they have what it takes.
This book leaves you with three basic options for your retirement account. You can buy the S&P 500 (or the total market) and add to it every month until you retire. That is probably the most lucrative plan, but it is also the most psychologically difficult to stick with. The opposite extreme is to develop an “All Weather” portfolio in the spirit or Ray Dalio, perhaps similar to the one I’ve modeled above. That should provide you with a low volatility over a wide array of market conditions with a decent rate of return. The third option is to develop a portfolio using the efficient frontier idea, specifying the level of risk you are willing to tolerate. Any of those three methods, implemented correctly, should result in your being able to retire in comfort and dignity.
I feel I would be remiss if I did not leave you with some parting thoughts about what items to include on your financial bookshelf:
- A Random Walk Down Wall Street: The Time-tested Strategy for Successful Investing (2016) by Burton G. Malkiel.
- One Up On Wall Street: How To Use What You Already Know To Make Money In The Market (2000) by Peter Lynch and John Rothchild.
- The Millionaire Next Door (2010) by Thomas J. Stanley.
- Jim Cramer’s Get Rich Carefully (2014) by James J. Cramer.
- The Intelligent Investor: The Definitive Book on Value Investing. (2006). by Benjamin Graham with Commentary by Warren E. Buffett.
- Thinking, Fast and Slow (2013) by Daniel Kahneman.
- Irrational Exuberance (2016) by Robert Shiller.
- All About Asset Allocation: The Easy Way to Get Started (2010) by Richard Ferri.
- Common Sense on Mutual Funds (2010) by John Bogle.
- The Five Mistakes Every Investor Makes and How to Avoid Them (2014) by Peter Mallouk.
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Last Updated: 6/25/2018