Brian Feroldi: Know Your Time Horizon & Automate Your Money

He cut his teeth covering the pharmaceutical and biotech industries for Motley Fool before starting his own company. He’s written about finance and investing for over a decade.

I found Brian on Twitter when I saw him tweet some graphics that I found to be super helpful.

I loved the way he simplified complex personal finance topics to make them easier to understand, and I immediately thought that he’d make for a great interview. So I sent him a DM, and he was nice enough to take some time to answer my questions.

When I asked Brian what he thought most investors get wrong about investing, he told me that they often neglect to figure out their time horizon. That is, how long they plan to invest.

“They don’t think of their time frame first. Always start by asking, ‘When do I need this money?”

His answer to this first question led perfectly to his answer to my next question, which aimed to identify the best piece of financial advice Brian’s ever received. His response? Short and sweet.

“Think long-term.”

So what his Brian’s advice for young people looking to create this system?

“Focus on maximizing your income and savings rate, not your rate of return.”

If you focus on your rate of return, you may be drawn to riskier asset classes. But it’s crucial to remember: riskier assets offer potentially higher returns because they have to. Those potential returns are not guaranteed. My favorite definition of financial risk is the odds of losing money. So keep in mind, high-risk, high-reward investments often make for poor returns if you over-allocate to them.

“Alternatives like art.”

While you can make a case that alternatives play some part in a portfolio, people tend to overstate their importance. At least, I think so.

Do you need to invest in alternatives? No. You can easily invest in stocks and bonds and create serious financial wealth.

Alternatives may sound interesting, but they’re not necessary. In some cases, they can also hurt your performance. If you are passionate about art, maybe you invest in some. But it’s best to keep alternatives to a relatively small portion of your portfolio.

My take: you’re probably better off building a large portfolio of stocks and bonds. If you want to diversify further, I’d probably opt for real estate.

Finally, what about buying back time? If you’ve read my other interviews, you’ll notice this question pops up regularly. After reading Dan Martell’s Buy Back Your Time, I’ve become a bit obsessed with learning how high performers use money to free up their time and spend more time doing what they love. I thought Brian’s answer to this was interesting because it differs from some of the other folks I’ve talked to.

“Automate bill paying. I do some of my best thinking during boring tasks like laundry and cleaning. I don’t outsource them.”

First, I love the bill automation answer. Financial automation is crucial to my system. As Brian alludes to here, it also unlocks a lot of time. What if you didn’t need to transfer money from your checking to your savings and investment accounts? How about paying off your credit card bills? What other bills do you pay each month and how much time do you spend paying them?

These are tasks that are easily automated. You don’t need to spend time doing these sorts of menial tasks, especially considering they’re not very fun.

The second part of Brian’s answer is what I found to be interesting. My assumption is that he could easily afford to pay for house cleaning and laundry. He deliberately chooses not to. Why? Because that’s time he uses for thinking. Similar to how some people take a walk when they need to brainstorm, Brian uses his time cleaning and doing laundry for thinking. I love that.

What I find especially interesting is that Brian chooses to do this. He doesn’t have to, but this works for him. This answer serves as a great reminder that you should lean into your preferences – not everyone has the same preferences and not everyone should set up their life in the same way.

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