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Practical Planning Tip: The Four Sons of Investing - The Simple Son

April 19, 2024

. Today we will discuss Stage 4 of an investors journey, which is The investor who is simple: The aspirational stage for investors is simplicity. This may sound counterintuitive, especially for folks who have developed a meaningful level of financial and professional success. After all, active management, regular modifications, and a threshold level of complexity is how you maintain and grow wealth, right? Wrong! To quote the famous economist and Nobel Laureate, Eugene Fama: “Your money is like a bar of soap – the more you handle it, the less you’ll have.”

The building blocks for successful investment management are simple and can be summed up in a few bullet points:

  • Diversification
  • Automation
  • Low cost
  • Tax efficiency
  • Boring > Exciting
  • Don’t patshke
  • Stay the course

That is all of investing in a nutshell. It applies equally to all levels of wealth, whether you’re just getting by or a multi-billionaire. Sure, many folks will need help implementing the above process due to a lack of experience, time, or desire. That’s fine and where a financial advisor who is a fiduciary comes into the mix. However, every facet of this process should be simple enough that your elementary school child can understand it. If it’s overly complex, then you are moving in the wrong direction. To quote Leonardo Da Vinci: “Simplicity is the ultimate sophistication.”

May the theme of the four sons inspire inclusion, patience, as well as investment success.


You can WATCH the full video here.