"The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays."
If you're reading these words and nodding your head in agreement, you're vastly ahead of the game because this idea is far outside the mainstream of how people view money.
For most people, the thought of money is inextricably linked with the goods and services it can buy and how those things will make their lives better, satisfy their desire to appear more successful in the eyes of their peers, and be 'happier'.
The idea of saving money is grudgingly conceded to be a necessary, but distasteful thing that responsible people must do. Most consumers view the next pay cheque or bonus in terms of what it can buy, not the independence it can provide.
These are the thoughts of Morgan Housel in his book, ‘The Psychology of Money,’ a review of which can be found here.
The truth is, we’re all fortunate to be living in an era where we have all the teachings of wise investors available to us. As compared to the 19th century, it's become much easier and cheaper for investors to participate in the growth of businesses through capital markets. Good investment isn't about having an inside track, taking bets and 'getting one over' on others so you look good (indeed ego is often the root cause of many dysfunctional financial decisions), and a relentless focus on material goods or our emotions/ego, badly misses the point.
This week, I published a list of 9 life-changing books to help you on the road towards financial freedom. I kept back one of my personal favourites to give it special attention...
In Odds On: The Making of an Evidence-Based Investor, Matt Hall shows how more than fifty years of modern finance have provided insight into how financial markets work and the ongoing revolution in the investment world: the shift from a traditional sales, speculative and product-driven world, towards one grounded upon academic evidence, planning, values and the better service of the interests of investors.
Those who develop and apply a strong philosophy based on these principles, can immeasurably improve their odds of long-term financial and life success. It's a memoir that resonates strongly with my own experiences; a manifesto that casts light upon an often unnecessarily complex area dominated by our emotions, and a guide to the way investing should be (but isn't).
The truth is that time is the currency of life. The ability to control your time means that you have the ability to control how the most valuable resource you own, is spent. The bottom line is that financial independence is not about what you can consume. It's also not necessarily about quitting your job and retiring early. Instead, financial independence is about freedom. Freedom to choose to spend your time as you see fit. Freedom to not do things that you don't want to do. Freedom to not associate with people who you dislike.
When viewed through the lens of freedom, personal finance and financial life planning are no longer the boring and tedious topics that many perceive them to be. Instead, they become essential components of living a good life and making well thought-out decisions about the limited time we all have left.
On the topic of time, when many people look at a compounding graph, it gives an impression that 'getting in early' is the only way to benefit from it. Given so many people come to the decision to start planning their life after the age of 40 or 50 – is there still hope?
The good news is, even if you catch the compounding train late, it can still get you to your destination.
On the topic of compounding, how do you get smarter every day? According to neuroscience, your education matters, but so does fluid intelligence.
The more you regularly learn, the more likely you will be able to associate 'old' knowledge to new things.
This means you only have to learn differences or nuances and you’ll be able to apply greater context (which also helps with memory storage and retrieval) to the new information you learn.
This all makes learning even easier, and research shows this will result in you being able to learn even more quickly – and retain a lot more. An investment in knowledge really does pay the best interest, as this compounds over time...
As always, and true to my own military roots, the final word is taken by former senior British Army officer, inspirational leader and Ironman Champion David Labouchere, in his piece entitled Stand Up. This sage advice reminds me of Jordan Peterson’s 12 Rules for Life and his number one rule, "Stand up straight with your shoulders back" (like a lobster)…!
A question for you
When you get better at what you do, you can make a bigger impact, solve bigger problems and make more income.
Ask yourself - How can I get better at what I do?
This week's meditations
"In the pursuit of knowledge, something is added every day. In the pursuit of enlightenment, something is dropped every day"
- Lao Tzu"No matter what your past has been, you have a spotless future"
- Unknown
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Have a great weekend and enjoy the ‘light’ reading!
Morgan Housel's The Psychology of Money: Timeless lessons on wealth, greed, and happiness
A review of The Psychology of Money by The Rational Walk
Sam Instone's 9 life-changing books to help you on the road towards financial freedom
Odds On: The Making of an Evidence-Based Investor by Matt Hall
Reaching Financial Independence by The Rational Walk
Getting in on the 50th Floor by The Rational Walk
How to Get Smarter Every Day, According to Neuroscience by Jeff Haden of inc.com
David Labouchere's article, 'Stand Up'
Jordan Peterson’s 12 Rules for Life: An Antidote to Chaos
