Don’t Play the Game

We had a wide-ranging conversation, but here are my three primary takeaways:

  • There are no shortcuts
  • Don’t mistake action for progress
  • Avoid playing the wrong game

Let’s dive in.

There are no shortcuts

Everyone wants to get rich quick.

People sell courses that claim to help you achieve this, but they’re bullshit.

Your friends may tell you about some investment they made that doubled overnight, but that’s not reproducible.

It may sound like a bummer, but no magic pill will help you build wealth immediately. In fact, you should be highly skeptical of anyone who tells you otherwise.

The good news, however, is it’s simple to build wealth over time with a relatively high degree of certainty

Save more than you spend and invest the difference.

Don’t mistake action for progress

“Investing is really easy. Save as much as you can and put it in index funds. Then leave it alone for decades.”

So what’s the problem?

Despite understanding this simple truth, many people behave differently.

Many of us feel like we’re not investing correctly if we’re not actively DOING something:

  • Invest in the latest fads
  • Pick individual stocks
  • Time the market

The truth is that these strategies don’t produce great results in the long run.

I love this from Jim:

“Just stick it an index fund and do something else.”

Avoid playing the wrong game

Jim told me that, years ago, he sold investments after his emotions got the better of him.

“I chased after internet stocks during the dot com boom… and cut my Roth IRA in half.”

After that, he learned to avoid “playing those games.”

Riding the ups and downs of investing trends and hot stocks is time-consuming and takes a large emotional toll on you.

In many cases, it’s not healthy. Your quality of life will almost surely be lower if you’re engaged in that sort of activity.

Here’s Housel’s game: being a passive investor with an optimistic view of the next 30 years.

If you want to figure out what game you’re playing, that’s a good start.

Jim’s Advice to His Younger Self

My favorite question for the financial experts I talk to is:

What advice would you give your 25-year-old self about managing money?

Jim delivered:

  • Spend as little time on it as possible
  • Automate all the things you hate doing
  • Set up your system and forget it