Investment lessons from genuine experts

Posted by Robin Powell on March 31, 2022

Investment lessons from genuine experts



One of the most frequent questions put to professional chefs is what they cook for themselves when off duty. Likewise, motor racing champions inevitably are asked what sort of car they keep in the garage at home. In the same spirit, what if you were to ask finance professionals how they invest their own money? What lessons could they teach us. A recent book explores just that.


There has to be a holy grail of investing. You would think so, wouldn’t you? Some money guru must have written down the secret recipe somewhere and all we have to do is get our hands on it and cook it up for ourselves. Instant wealth awaits.

Or maybe not. In fact, if there is one takeaway from How I Invest My Money — a collection of interviews with 25 financial experts about how they put their own capital to work — it is that money choices are personal. People differ in their goals, attitudes, risk appetites, and values. And that means there is no single, “right” way to invest.

There are some common themes, however, and in this fast-moving volume of insights, authors Joshua Brown (a financial adviser/blogger) and Brian Portnoy (a financial wellness expert) manage to tease a few nuggets out of their subjects. What lessons can they teach us?


Keep it simple

One of those lessons is the virtue of keeping it simple in terms of investment strategy. Diversifying broadly, staying disciplined and only taking risks you understand are the keys to success, counsels one of the interviewees, a veteran financial adviser.

A second theme in the book is the notion of understanding what you value, apart from money. For one subject and his wife, the key is maintaining a sense of independence. And it is this non-negotiable value that shapes their investment approach. Someone else may place the biggest emphasis on flexibility, the ability to change one’s mind at short notice, pull up roots and start all over again. An illiquid portfolio might not be the best solution for a person like that.


Accept your mistakes

Another of the lessons from money experts that comes across strongly in this book is a willingness to accept mistakes along the way. Not every financial decision you make will turn out perfectly. But the best investors learn from their missteps and often discover opportunity as a result.

Learning to let go is also touted as an important attribute. You simply cannot control everything. Markets are inherently volatile and losses are inevitable. Not every part of your portfolio is going to prosper. That is why you diversify. But risk is the flipside of reward. And how much risk you are prepared to take is — you guessed it — a personal choice.

People differ in their attitudes to risk and return because they are formed by different experiences and value different things. So what comes through in the book again and again is how important individual perspectives can be in shaping how you invest.

“All of the people in this volume are well-versed in academic investing theories,” Brown writes. “But everyone is coming from somewhere unique. Everyone has a story to tell and how we invest, save and spend is one revealing way of telling that story.”

Brown’s motivation for writing the book, he says, was his experience of speaking on financial television shows for nearly a decade without ever being asked about his own personal approach to building wealth.

“I’ve commented on everything under the sun. And in all of that time, not once did someone say: ‘Tell us about how you invest your money.’”


We’re looking for different things

It turns out the best answer to the question of how to invest is that “it depends”. For a start, not everybody wants to be rich. For some, security and the meeting of simple needs is enough. For others, already wealthy, it might be about sharing that wealth.

But it’s clear that what works for a professional money manager might not be appropriate for everyone. On that score, the book cites the example of doctors, who frequently choose different end-of-life treatments for themselves than they would prescribe for their patients.

“A doctor may throw the kitchen sink at her patient’s cancer, but choose palliative care for herself,” the authors write. 

“The difference between what someone suggests you do and what they do for themselves isn’t always a bad thing. It just underscores that, when dealing with complicated and emotional issues that affect you and your family, there is no one right answer. There is no universal truth.”

The search for the investment holy grail goes on. But one of the key lessons from Brown and Portnoy’s book is that a good starting point is to “know thyself”.



Money and life: a question of balance

The odds and the gods: the origins of risk management

Nudges are still the best way to tackle investor inertia

A one-page financial plan really is enough

Charles Ellis on the game you shouldn’t play



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© The Evidence-Based Investor MMXXII


Robin Powell

Robin is a journalist and campaigner for positive change in global investing. He runs Regis Media, a niche provider of content marketing for financial advice firms with an evidence-based investment philosophy. He also works as a consultant to other disruptive firms in the investing sector.


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