How I Invest My Money | Joshua Brown

Summary of: How I Invest My Money: Finance experts reveal how they save, spend, and invest
By: Joshua Brown

Introduction

In ‘How I Invest My Money: Finance experts reveal how they save, spend, and invest,’ author Joshua Brown provides an insightful look at the different perspectives and strategies of various professionals in the finance world. The book underscores that personal finances are, indeed, personal and that there is no universal truth or one-size-fits-all approach to investing. This summary delves into the lives and minds of several finance experts, showing how their unique experiences, values, and goals shape their investment approaches, from independence funds to dividend-paying investments, and even taking risks in crypto-assets. As you read, you’ll discover the key messages of each expert and learn from their diverse financial choices.

Investing and Personal Values

Sandy Gottesman, founder of First Manhattan, asks job candidates about their personal investment choices to reveal the importance of personal values in investing. There are no universal investment truths as different people have different needs and goals. Doctors and non-doctors have varying needs in identical situations, and the same is true for financial experts. It’s not always necessary to follow universal prescriptions, and what you do with your money should depend on what you want to achieve. Financial writer, Morgan Housel, values independence, which shapes his financial decisions. Despite their rising incomes, Housel and his wife have kept their lifestyle the same, and every cent of every raise has gone into an independence fund.

Dividend-Paying Stocks: An Alternative Retirement Income Strategy

Discover how dividend-paying stocks provide both stable and growing income while avoiding depletion of your overall investment fund. Learn how to pick the right companies and generate consistent shareholder return.

Jenny Harrington is not only the CEO of Gilman Hill Asset Management but also the portfolio manager of the company’s equity income strategy. Her favored investment strategy, which combines dividend-paying stocks with selecting the right companies, has been proven effective. It all started when a client called her to say he was getting ready to retire. The problem was that he needed an income, and at just 55 years old, he also required that income to grow over time.

Luckily, Harrington discovered that dividend-paying investments provide both stable and growing income. She realized that some investments, such as bonds, provide a stable income but without growth. While some investments require the sale of assets like stocks, depleting the overall income-generating investment fund. Harrington’s solution was to identify companies that offer regular dividends from revenue left over after servicing debt and reinvesting a portion of its revenue.

Investing in dividend stocks buys you a stake in a company that pays dividends periodically, contributing to a stable and growing income. Companies award dividend stocks when they anticipate revenue and profit growth. Investors entrust their cash with these firms because of their solid business plans, and in return, they receive a share of the revenue. The dividends paid out to investors increase as the company grows.

To Harrington, investing in a dividend income portfolio is one of the purest mechanisms for generating shareholder return. The trick lies in selecting the right company to invest in. Harrington suggests mature businesses with long histories of consistent revenue and profit generation, such as AT&T, Verizon, or IBM. Additionally, there are other, more niche options like Douglas Dynamics, a company that produces snow plows. Although its sales are inconsistent from year to year, they consistently trend upwards over an eight-year cycle.

In conclusion, if you’re looking for an alternative investment portfolio for generating a stable and growing income, look no further than dividend-paying stocks. Hitch your investments to well-established corporations with histories of consistent revenue and profit generation and plan for the long term. With this strategy, you can generate consistent shareholder return.

Time is Our Most Valuable Asset

Dasarte Yarnway, the founder of Berknell Financial Group, believes that time is wealth that money can’t buy. Yarnway values time above all other assets because of the tragic losses he has experienced throughout his life. He believes that investing is not only about returns but also values. Despite his family’s financial struggles, Yarnway’s parents filled their home with love and gratitude, teaching him that even in difficult times, there is always something to be thankful for. Yarnway’s experience as a business owner has allowed him to have control over his own time and be present during life’s precious moments. By leading by example, he motivates others to commit to something and pursue their true callings. For Yarnway, seeing others prosper is the biggest rate of return he could ever hope for.

The Power of Investing in Equities

Investment research relies on past data to inform decisions for the future. Despite being an unknown, investing in equities can lead to long-term rewards, especially if diversified in index funds. Ashby Daniels, a financial advisor, shares his strategy of putting 100% of his portfolio into equities for his long-term goals and covering short-term needs with his income. Though equities can be volatile, the trade-off for potential huge windfalls is worth the emotional rollercoaster and patience. Daniels advises against trying to beat the market and instead encourages investors to resist the urge to tinker with their investments.

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