Thursday, March 01, 2012
"You Should Only Have To Get Rich Once" by Russell E. Holcombe
I just finished reading a book called "You Should Only Have to Get Rich Once" by author Russell E. Holcombe. As a Certified Financial Planner, Russell Holcombe's goal is to help wealthy clients better understand how to manage their money and to stay wealthy.
I'll be candid with you, when it comes to talking about investing I get very confused. My husband and I have a few small accounts but nothing that amounts to putting us into the 'wealthy' category. I certainly hope that someday we'll be in a much higher tax bracket, but for now I'll settle for where we are.
Regardless, I began reading this book feeling a bit nervous that I might get lost or overwhelmed with discussions about financial matters and the "how to's" about investing. But I was pleasantly surprised at how much I enjoyed this book.
For starters let me say that I try very hard to live my life honestly. I'm not only honest with others, but I'm also honest and true to myself. I try to make decisions that take me in the direction that "I" want to go and not the direction that I am expected to go. I have my own home based business and believe me when I tell you that I didn't have many cheerleaders rooting for me when I made the decision to forge my own path. Everyone seemed to be a 'Doubting Thomas' and their words of encouragement were few. But I'm an entrepreneur and I think differently. I wanted (and still want) different things for my family. I want to run my life the way I see fit. I don't want to live out my days according to what others' opinions may be.
That kind of honesty coupled with a conservative mentality toward money puts me in the right frame of mind to appreciate Mr. Holcombe's advice and teachings. And let me add that, like me, my husband is a sole proprietor and even more conservative with money than I am.
As a financial professional Mr. Holcombe has seen many wealthy persons that have fallen for the "traps of the financial factory". Sadly many of these people have lost a good portion of their wealth when it really wasn't necessary. While the author began writing this book many years ago, he was still writing it during the economic disaster of 2008. He believes that some of the wealth that was lost in that downturn was simply due to over-investing.
He explains that if you only focus on making a profit then that's where your trouble lies. Unfortunately, "Profit can be an addictive narcotic. Everyone wants it. People will do anything to get a hit of it in their portfolio."
He wants people to change the way they think about money. In his opinion when a wealthy person reaches a certain level of wealth he or she needs to stop over-investing. Now understand, he doesn't say to stop investing, just stop over-investing. There is a difference and in my opinion it makes complete sense. His comparison is that of running a race. You've run the race and you've reached the finish line. Common sense says that's the point when you stop running. Right? But what would you think if you saw someone running a race yet once they've passed the finish line they continue to run? Most people would consider that person as crazy!
So how do you figure out when to stop over-investing? The author explains that one needs to find their "Point of Independence" (POI) which he defines as:
"Your Point of Independence is the intersection in the road where the money you need to do whatever you want to do in life is funded without your labor."
Wow! That sounds like a wonderful intersection! It's a very interesting concept and the book shares a variety of stories of people who figured out their own personal POI, who were wise and stayed in control of their money. And it also shares stories about some wealthy people who weren't so wise. It really has helped to change the way I think about my money and what I hope my money will do for me someday.
As I stated earlier, my husband and I have a long way to go to reach the level of income where we should begin this line of thinking. But there's nothing wrong with preparing, right? And it's a great feeling to know that you shouldn't fall for or believe everything your financial advisor tells you. Prior to reading this book my husband and I had a meeting with our financial advisor. My husband is much more outspoken than I and he was feeling frustration with what our advisor was trying to tell us. We left the meeting feeling uneasy and disagreeing with the numbers and comparisons our advisor was sharing with us.
Magically a few days later this book appeared in my mail box. How about that! Talk about the universe trying to send us a message!
So I've learned that just as my entrepreneurial mind set told me I must forge my own path I also have to do the same from a financial perspective. Be your own pioneer and figure out what suits your life best. Be honest with yourself and figure out what you want your money to do for you. There is no need to jump on every bandwagon that comes along and agree with every one else's opinion of how you should handle your wealth.
I highly recommend this book!
***And one final note: The author was kind enough to send me a second copy of his book to use as a give away to one of my followers. Immediately after this post goes live I'll be sharing the link on Twitter and my Facebook Page. I'll continue to promote this contest over the next several days. The tenth person to contact me will be the winner. You can contact me via Direct Message on Twitter, message me on Facebook or comment on my blog. It's very simple! Good luck!***