- I host a podcast called The Rewired Soul and have interviewed some of the best personal finance writers.
- Daniel Crosby taught me that being right doesn’t make you smart and Nick Maggiulli showed me that it takes luck to buy a house.
- Brian Feroldi helped me see that no single person, not even Elon Musk, affects the price of a stock.
The public school system taught me nothing about financial literacy, and neither did my lower-middle-class parents. Fortunately, I am a very curious person who loves to read and at the age of 35 I decided that I would learn to invest, save and be smarter with my money. I have read dozens of books on personal finance to educate myself and have been fortunate enough to speak with some of the authors of my podcast, The Rewired Soul.
Daniel Crosby, Nick Maggiulli and Brian Feroldi have taught me a great deal through their great books, but I have learned even more from being able to speak with them personally. Here are three of the greatest money lessons I’ve learned from these personal finance experts.
1. Being right doesn’t make you smart
From an early age, we are taught to “trust our instincts” and follow our intuition. As someone who has made many terrible decisions based on my instincts, I have firsthand experience of why this is terrible advice.
When I invited Daniel Crosby to join the podcast to discuss his book, “The Laws of Wealth,” I learned more about the science behind why our intuition regularly disappoints us. More importantly, I have learned why our ego prevents us from understanding it sooner.
Crosby specializes in behavioral finance, which takes a look at our irrational behaviors when it comes to money. He has a PhD in psychology and explained how our thinking is often flawed. This is why we buy high and sell low when we invest even though we know we should do the opposite. It is also why we think we can predict the markets or not recognize the signs of a bubble.
I asked Crosby why we are so oblivious to these mistakes that we regularly make while investing.
I’ve learned that one of our biggest problems is that we highlight our victories and make excuses for our defeats.
When we are right, it is because we are a genius, but when we are wrong, it was just bad luck. For behavioral finance pundits like Crosby, results aren’t what matters most. Decision making is what matters most.
If I crossed the highway and survived, it wouldn’t be a good decision. Likewise, if I dump a lot of money into a bad stock and, due to random factors, the price doubles, that doesn’t mean it was smart to do so.
Taking a step back and evaluating the process by which I make investment decisions has helped me build good habits with investing and other financial decisions.
2. It may take a little luck to buy a house
I didn’t know Nick Maggiulli, but when his new book came out, I stuffed it in about a day. “Just Keep Buying” taught me a lot because Maggiulli challenges conventional wisdom through data. The book taught me why having credit card debt isn’t always bad and why you may not want to maximize your 401 (k). When he arrived on the podcast, I wanted to ask him more about the idea that millennials like me are in a more difficult situation than previous generations.
I am a single father who works like crazy keeping various side chores at bay and only recently started earning over $ 60,000 a year. My girlfriend just finished graduate school in social work, so she won’t even make a lot of money. The real estate market in Las Vegas, where we live, is out of control and I don’t see how realistic it is to save 20% for a down payment. The average cost of a home in Las Vegas is over $ 430,000, so we should save $ 86,000. And that’s if the prices don’t go up before we save so much.
Speaking with Maggiulli, I asked him if there was something that escapes me because this does not seem within reach. Maggiulli firmly believes in finding ways to increase your income, and so am I, but he acknowledged that he might take some luck in this real estate market.
Without an incredible job opportunity, inheritance, or other major financial gain, he told me it would be difficult to buy a house unless the market changed soon.
He lives in New York and the rent is quite normal there. Now, I think renting for the foreseeable future might be the most realistic option for us too.
3. No single person hits an action
We are not even halfway through the year and there has been no lack of controversy and public indignation linked to the shares. There have been viral narratives about how Joe Rogan plunged Spotify’s stock price or Elon Musk’s acquisition of Twitter caused Tesla stock to plummet. I was skeptical of these narratives but wasn’t sure.
Brian Feroldi just released his book, “Why Does the Stock Market Go Up?” So I figured he’d be the best person to ask when I interviewed him on the podcast.
When I asked him what he thought of this news, he shut it down pretty quickly. She explained that we have to look at the market as a whole with her. In this way, we see if it is only the price of a single stock that is falling or the entire market.
The stock market has been terrible for most of 2022, so in the days when these stocks were down, most other stocks were too. Thanks to Feroldi, I know it’s not a good idea to believe these narratives about a single person crashing a title – and I know it’s especially important that he doesn’t make decisions based on these narratives.
I’m still at the beginning of my financial journey, so I still have a lot to learn. I am extremely fortunate to be able to speak to some of these experts and learn directly from them, and I am looking forward to discovering more ways to improve my financial future.