How to Build Wealth Without Being “Smart”: The Truth About Money (Lessons They Don’t Teach in School)

Episode Transcript
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Speaker 1 (00:00):
Welcome to the Deep Dive, the show where we really
try to cut through the noise and get straight to
the insights that genuinely make you well informed. Today, we're
tackling a question that has probably crossed your mind, maybe
even you kept you up at night more than once.
Why is it that some of the most brilliant, highly
educated people we know, individuals who are like total whizzes

(00:20):
in their fields, capable of solving incredibly complex problems, why
do they often find themselves struggling financially. Their spreadsheets might
be perfect, their analysis flawless, yet money remains this elusive,
bewildering thing. And then conversely, you see others, perhaps with
less formal training, maybe a less impressive resume on paper,
who seem to achieve significant wealth with well surprising ease.

Speaker 2 (00:42):
It's a fundamental paradox, isn't it really is? For so
long we've been conditioned, I think, to believe that financial
success is primarily about intelligence, about mastering complex formulas, or
predicting market movements, or maybe having some secret insider knowledge.
We think it's a math problem essentially, or a puzzle.
The smartest person in the room just solves what our

(01:03):
deep dive today reveals is something far more foundational and
frankly quite liberating.

Speaker 1 (01:09):
Exactly, our mission today is to go far beyond the
usual stuff, the spreadsheets, the intricate market analyzes, the latest
investment strategies. We're diving deep into a fascinating body of
work that untax a surprising, often counterintuitive truth. Financial success
has less to do with your raw intelligence, your IQ,

(01:29):
and everything to do with your behavior, how you act.
We're distilling powerful insights from a really well regarded exploration
of the psychology of money. It's designed to give you,
our listener, a genuine shortcut to understanding what truly drives
financial outcomes. Get ready for some profound aha moments, I think,
because what we're about to unpack really challenges a lot
of the conventional wisdom you might have absorbed about money

(01:51):
and wealth over the years.

Speaker 3 (01:52):
Right, and to really kick things off, let's explore a
concept that fundamentally shifts how we view financial decisions, both
our own and crucially those of others. It's this incredibly
powerful idea that when it comes to money and the
seemingly irrational choices people make, no one is truly crazy.

Speaker 1 (02:09):
No one is crazy now That's a bold statement, isn't it,
Especially when you look around and observe some of the
financial decisions people make out in the world, or maybe
even reflect on some of your own past choices. Perhaps,
but the core idea here is so profound it's almost revolutionary.
Every single financial decision we make, no matter how illogical
or baffling it might seem to an outsider looking in,

(02:30):
is from our own perspective, entirely justified, justified by our
unique experiences, our personal histories, the mental models we've built
of how the world works. Think about it for a moment.
Your personal experience is growing up, the economic climate you
live through, your family's unspoken rules, or maybe they're very
overt relationship with money, the financial struggles or successes you

(02:50):
witness firsthand. These deeply personal imprints shape your beliefs and
behaviors far more powerfully than say, objective facts, textbook knowledge,
or market trends ever.

Speaker 3 (02:59):
Could truly highlights how deeply rooted these beliefs are.

Speaker 4 (03:03):
They're almost visceral. Let's paint a picture here.

Speaker 3 (03:06):
Imagine someone who grew up in a country plagued by
severe hyperinflation, where the value of money didn't just erode annually,
but daily, maybe even hourly. We're talking about situations where
prices at the grocery store could literally change between the
time you picked up your bread and reach the checkout.
It sounds wild, but it happens. Their lived experience, steeped

(03:26):
in this economic chaos, would teach them a pretty chilling lesson.
Saving is feudile, absolutely pointless. Money loses its worth rapidly,
almost before your eyes. Their impulse would be this desperate
urth to spend immediately, you know, to convert that rapidly
devaluing currency into anything tangible, food, property, experiences, beforehich just
vanishes into fin air. Now juxtaposed that with someone from

(03:48):
a country with a long, unwavering history of stable currency,
where savings, accounts and investments reliably grow, where compounding is
a known and trusted friend. For them, saving isn't a gamble.
It's a natural, domistic act. It's a clear path that
future security and prosperity.

Speaker 1 (04:03):
You can instantly see this stark contrast, can't you. It's
night and day. Here. You have two equally intelligent, perfectly
rational people, one driven by these deeply ingreined survival instincts,
spends everything as fast as humanly possible. The other, operating
from a place of stability and trust, diligently saves and
invests for the future. To an outsider, the first person

(04:24):
might seem reckless, even financially irresponsible. The second appears prudent discipline,
but from their own unique vantage points, given their personal
histories and the economic realities they actually experienced, both decisions
make perfect rational sense to them. This core idea that
no one is truly crazy with money foster's immense empathy.
I find it helps us reduce snap judgments, not just

(04:47):
of others, but also of ourselves, which is maybe even
more important. It allows us to understand that what we
might perceive as our own crazy financial habits are maybe
just perfectly logical responses to our own life story. It's
a powerful lens through which to examine and why we
do what we do with our money, and perhaps why
others do what they do exactly.

Speaker 3 (05:04):
And this profound understanding of our personal money lens leads
us directly to what truly represents the ultimate form of wealth,
a form that extends far beyond just accumulating material assets,
you know, the stuff. The highest form of wealth, according
to the insights we're exploring today is not the biggest
bank account or the most luxurious possessions. It's the ability
to control your own life and, more specifically, your most precious,

(05:29):
non renewable resource, your time.

Speaker 1 (05:32):
Okay, here's where it gets really interesting, because this challenge
is the very notion of what rich truly means in
our culture. Think about why so many people chase high
paying jobs, prestigious careers, or those demanding entrepreneurial ventures. Often
it's for the money, yes, obviously, but it's also for
the perceived importance, the status, supposed freedom that comes with
a high income, or so we think. The source material

(05:54):
shares a truly compelling anecdote about the author's own experience
as an investment banker. Early in their career. They were
drawn by the siren call of substantial earnings and what
seemed like an incredibly prestigious path.

Speaker 3 (06:05):
Yeah, but they quickly realized the immense control in demanding,
relentless hours that came with the job. It wasn't freedom
at all. The author recounts experiencing more controlled hours than
any human being could bear, describing themselves as feeling like
a slave to his boss. Pretty intense language. Despite the
truly substantial pay, the sheer misery set in almost immediately.

(06:27):
It lasted only about a month before they simply had
to get out, walk away. This vivid personal account profoundly
illustrates a critical point. Even an activity you might initially
love or when you were intensely drawn to because of
its financial promise, can become absolutely detestable if it systematically
strips away your personal autonomy, your freedom, your ability to

(06:48):
dictate how you spend your waking hours. I remember early
in my career I had a job that paid well, definitely,
but I was effectively on call to four to seven,
even when I wasn't physically at work. The expectation was
always there, always available, Thinking about the next deadline, the
next crisis, felt like my life wasn't really my own.
And despite the financial comfort, that feeling of constant obligation
was just incredibly draining heavy. It made me realize very

(07:11):
quickly that money without freedom is just well, it's just
a gilded cage.

Speaker 1 (07:16):
So what does this all mean for us? For you listening,
it means that while many money making opportunities are incredibly tempting,
often promising a direct path to financial security, a significant
number of them can actually be traps, hidden traps. They
dangle the lure of substantial financial gain, but at the hidden,
often unacknowledged cost of losing one of your most precious,

(07:37):
finite values. The ability to do what you want, when
you want, with whomever you want, for as long as
you want. That quote really resonates this concept of freedom.
The capacity to dictate your own time and choose your
own path is truly priceless. It can't be bought, not
directly anyway. It's the ultimate dividend of financial success, far
more valuable than any material possession you could acquire, and

(08:00):
it circles back beautifully to our first point. Doesn't it
that no one has crazy idea? Perhaps some of those
irrational financial decisions we observe or even make ourselves, like
leaving a high paying, high status job, we're consciously opting
for a simpler life with less income. Maybe they're not
crazy at all. They might in fact be desperate, perfectly
rational attempts to reclaim lost control, to buy back a
shred of that invaluable freedom, or just to escape a

(08:22):
gilded cage that started feeling like a prison.

Speaker 4 (08:24):
Right.

Speaker 5 (08:25):
Moving on from the individual lens and the sort of
deeply personal nature of our financial decisions. We now shift
our focus a bit. Let's look at some powerful, yet
often unseen forces and common misconceptions that profoundly influence financial outcomes,
yet often go completely unacknowledged. The first of these, and
one that's incredibly difficult for us to fully grasp, I think,
is the underestimated duo luck and risk.

Speaker 1 (08:46):
Oh yeah, it's an uncomfortable truth, isn't it? Because it
feels like it diminishes effort. If you ask highly successful
business people, celebrated entrepreneurs, or influential figures how they made
their fortune, you'll almost invariably hear a narrative centered around
sheer grips, relentless hard work, smart decisions, and significant sacrifice.
And look, those things are absolutely essential. But the insights

(09:08):
we're exploring highlight that invisible variables like luck, good or bad,
and risk are profoundly decisive, often the deciding factors. It's
incredibly difficult, almost impossible, to really dissect what precise percentage
of an outcome is due to skill, what's down to
pure unadulterated look, and what's due to the inherent risks
someone took that just happened to pay off or tragically didn't.

(09:28):
We tend to see the dazzling results, the towering success,
but we often fail to see the intricate, often messy,
and incredibly complex pathways behind it, the countless near misses,
the sheer randomness that led there. We don't see the
full complexity, you know, just the polished final product.

Speaker 3 (09:42):
Let's consider one of the most well known success stories
of our time, Bill Gates. Often held up as the
absolute epitomy of business acumen, innovation, strategic genius. And while
his brilliance and vision are undeniable, of course, the source
material points to crucial, almost serendipitous elements luck in his
earliest journey that really paved the way for Microsoft. He

(10:04):
attended Lakeside, an elite private school in Seattle back in
the nineteen sixties. It was almost miraculously the only school
in the entire area, perhaps even one of the very
few in the whole country, to possess a Teletype Model
thirty three computer. This unprecedented, truly unique access to a
cutting edge machine in such a formative age was just
an incredible stroke of luck. It profoundly influenced his early

(10:26):
interest and passion for computing. He even got special permission
from the school to skip math classes, allowing him to
intensely pursue computer science, spending countless hours honing his skills.
Gates himself has openly acknowledged that if he hadn't been
able to study at a school with a computer like Lakeside,
Microsoft might simply never have existed. Just pure chance in
a way, and.

Speaker 1 (10:45):
The story gets even more poignant, more stark when you
consider the sheer randomness of life and fate itself. Gates
wasn't the only brilliant, driven student messing around with computers
at Lakeside. He had friends like Paul Allen, who'd later
co found Microsoft with him. Of course, is Kent Evans
equally bright, equally talented, arguably just as passionate about computers.
You might assume all three were destined for similar heights

(11:07):
of technological pioneering. But Kent Evans tragically died prematurely in
a mountain climbing accident just days before his high school graduation.
Gone This incredibly stark example truly underscores how uncontrollable external factors,
pure unadulterated risk and bad luck can play a devastating
career ending, even life ending role in individual fates, regardless

(11:29):
of inherent talent, hard work, or ambition. We celebrate the
towering success of one as we should, but we often
fail to acknowledge the complex, almost arbitrary web of circumstances,
good luck, bad luck, inherent risks that truly shape those outcomes.
It's not about diminishing success, not at all, but about
understanding the full complex picture exactly.

Speaker 3 (11:47):
And from this sobering understanding we can draw three crucial,
actionable lessons. They can really shift our perspective. Firstly, and
this is incredibly important for self compassion and empathy for others.
All success is solely due to hard work and brilliant
decision making, and conversely, not all failure as simply due
to laziness, in competence, or poor choices. Sometimes stuff just happens.

(12:11):
Keeping this fundamental truth in mind can foster immense empathy,
both when you're judging others' financial outcomes and critically when
you're reflecting on your own setbacks or triumphs. It helps
us avoid harsh self judgment for things that were maybe
beyond our control, and prevents unfair criticism of others who
might have simply drawn a tougher hand in the game
of luck.

Speaker 1 (12:29):
That's incredibly powerful, isn't it, because it truly frees us
from that often tyrannical pressure of constant upwards social comparison,
which feels relentless sometimes, and that leads directly to the
second lesson, avoid fixating on exceptional cases. Don't try to
take extreme examples as direct blueprints for your own life
or financial strategy. The more extreme or exceptional a result,

(12:50):
the billionaire, startup founder, the lottery winner, the less applicable
it probably is to the general population, precisely because it's
highly probable that those extreme outcomes were heavily influenced by
extreme cases of luck or risk. You simply can't replicate
someone else's unique stroke of luck that one in a
million chants, and you might not or even shouldn't want
to take on their level of risk, especially if their

(13:12):
game their context is fundamentally different from yours. Trying to
copy the outliers often leaves to disappointment because you're missing
those invisible forces that propelled them right.

Speaker 3 (13:22):
And finally, the third lesson, one that really builds resilience.
Nothing is as good or bad as it seems. By
fully embracing the pervasive, often hidden role that luck and
risk play in the results we obtain, whether in finance
or just life in general, we become far more resilient,
more flexible, more grounded. It helps us forgive ourselves for setbacks,

(13:43):
so those times when things simply didn't go our way
despite our best efforts, and also us understand that sometimes
things are genuinely beyond our control, just a roll of
the dice in an unpredictable world. And perhaps most importantly,
it gives us the courage and the perspective to keep trying,
knowing that the game isn't always fair, but it's also
not always rigged against you either. It encourages a kind

(14:03):
of persistent, cautious optimism, keep going, but be realistic.

Speaker 1 (14:07):
Absolutely that shifts the whole frame, doesn't It takes some
pressure off. Now let's talk about another incredibly common misconception,
one that trips up so many people in their pursuit
of financial freedom, the deceptive nature of visible wealth. What
often appears as wealth is merely spending and true wealth
that's almost always invisible, precisely because it's saved, invested, and

(14:29):
strategically managed behind the scenes, not flaunted.

Speaker 3 (14:32):
This is such a crucial, yet often misunderstood distinction. In
our highly visual, consumption driven world, we're bombarded with it.
We live in a society where visible displays of affluence,
the flashy car, the designer close, the sprawling mansion are
constantly paraded as definitive signs of financial success.

Speaker 4 (14:50):
That's the image.

Speaker 3 (14:51):
But when people articulate their desire to be a millionaire,
they very often, perhaps unconsciously, mean they want to spend
a million dollars. They envision the opulent lifestyle, the lavish vacations,
the endless shopping spreees. Yet by definition, spending a million
dollars is the exact fundamental opposite.

Speaker 4 (15:06):
Of accumulating a million dollars.

Speaker 3 (15:07):
It's the act of depleting wealth, of transferring it away,
not building it up.

Speaker 1 (15:11):
It's a powerful mental trap, isn't it easy to fall into?
Think about it this way. When you see someone driving
a brand new ultra luxury car or living in an
enormous palatial house, you are not in that moment seeing
their wealth, not directly. What you're actually seeing is the
tip of the iceberg of their expenses. That car, that house,
those clothes, they represent money that has already been spent,

(15:33):
money that has flowed out of their financial ecosystem, not
money that has been saved, invested, or is quietly growing somewhere.
True wealth isn't the car in the driveway. It's the
quiet accumulation of assets that nobody sees. The investments growing
discreetly in accounts you don't even know exist, the significant
portion of money you haven't spent on visible status symbols.
It's the optionality, the security, the choices that money provides,

(15:56):
not just the things it buys.

Speaker 3 (15:58):
Precisely, to put it simply, wealth is optionality, flexibility, and growth.
It's the quiet power of having resources available, the security
of knowing you can buy things if necessary, or pursue
opportunities when they arise or whether a storm. It's not
about the act of spending to impress others or to
inflate your own ego. The profound insight here is that

(16:18):
spending money to show others how much money you have
is quite simply the fastest, most effective way to have
less money. It's self defeating. It's a fundamental psychological trap.
The desire for external validation through consumption often directly undermines
the very goal of true lasting financial security. And let's
be honest, the person you're trying to impress probably isn't

(16:38):
really paying that much attention anyway, or if they are,
they might just be wondering how much debt you're in
to afford it all.

Speaker 1 (16:44):
And that relentless, often unconscious desire for more, for external validation,
for the next, bigger, better thing brings us directly to
Part three, the peril of endless desire and the profound
importance of knowing when you have enough. This is where
things can get really dangerous, because the pursuit of more
can become an insatiable, self defeating trap, where the satisfaction

(17:05):
of simply having enough is constantly outpaced by a relentless,
escalating desire for increasing wealth, power, or status.

Speaker 3 (17:12):
This drifting goalpost phenomenon is a subtle but incredibly potent
force in human psychology. It's like the hedonic treadmill, but
for finance. The source offers a brilliant, almost legendary anecdote
about two iconic writers, Kurt Vonnegut and Joseph Heller. They
were at a lavish party hosted by a billionaire on
some exclusive island, surrounded by unimaginable opulence, just dripping with wealth. Vonnegut,

(17:36):
perhaps marveling at the sheer scale of the wealth on display,
remarked to Heller that their host, the billionaire, probably made
more money in a single day than Heller had made
from his immensely successful, critically acclaimed novel Catch twenty two
over its entire lifespan. Heller's response was immediate, quiet, and
absolutely profound. He just said, yes, but I have something
he will never have enough.

Speaker 1 (17:57):
Wow. What a mic drop moment. Right enough, That single
simple word captures the very essence of true financial peace,
emotional contentment, and a deep understanding of what genuinely matters.
But the counterexample is equally compelling and far more tragic,
highlighting the brutal consequences of not knowing one enough is enough.
Consider the story of Rajat Gupta. He began life as

(18:19):
an orphan in India, yet rose to truly extraordinary heights
through here intellect and ambition. He earned an MBA from Harvard,
then ascended to the coveted position of CEO of McKinsey
and Company, one of the world's most prestigious consulting firms.
Talk about reaching the top by two thousand and eight,
his personal estate was reportedly valued at a staggering one
hundred million dollars. By any objective measure, he seemingly had

(18:39):
it all, wealth, power, prestige, and unblemished reputation everything.

Speaker 3 (18:44):
Yet despite this monumental success and incredible fortune, Gupto wanted more.
He wasn't satisfied, and he proved it. During the terrifying
depths of the two thousand and eight Goldman Sax crisis,
when the financial world was teetering on the brink, Warren
Buffett decided to make a dramatic five billion dollar investment
in the bank to help shore it up to signal confidence.

(19:05):
As a then member of the Goldman Sachs Board of Directors,
Gupta was privy to this highly confidential, market moving information
before it was made public.

Speaker 4 (19:13):
Inside info.

Speaker 3 (19:14):
Driven by what the source material aptly describes as the
greed of never having enough, he secretly called a hedge
fund manager, Raj Rogiatnam of Galleon Group and arranged by
Goldman Sachs shares based on this non public information. This
happened just minutes before the news of Buffett's investment hit
the wires and causes stock to searche classic insider trading.
This flagrant act led to his arrest, a sensational trial,

(19:37):
a completely ruined reputation, and the abrupt, humiliating end of
his illustrious career, culminating in a prison sentence. He risked everything,
his freedom, his reputation, his family's future, and lost it
all because one hundred million dollars simply wasn't.

Speaker 4 (19:50):
Enough for him.

Speaker 3 (19:51):
It's a chilling, unforgettable lesson.

Speaker 1 (19:54):
That story is just yeah, a chilling cautionary tale for
all of us, no matter our income level. From this
profound struggle with enough, the author distills three vital practical
lessons that we can all carry forward. First, and perhaps
the most difficult financial skill to master in a world
of endless consumption, in comparison, is preventing your own goalposts

(20:16):
from perpetually moving further away. When your taste for more wealth,
more power, more possessions increases faster than your actual satisfaction
or your actual accumulation, that's a bright red flag. That's
danger territory. It's a clear signal that you might be
on the verge of taking irrational risks, sacrificing what truly
matters for an endless fleeting chase that never actually satisfies.

(20:36):
True happiness, we're reminded, isn't found in constant expectation, but
in the profound satisfaction of having what's truly sufficient for
a good life, whatever that means to you.

Speaker 3 (20:45):
Secondly, and this is a universal truth that applies far
beyond finance, social comparison is quite simply unnecessary torture.

Speaker 4 (20:54):
It just makes you miserable.

Speaker 3 (20:56):
There will, always, without exception, be someone who has more
than you, someone getting better results, someone who appears higher
up the ladder, someone with a shinier call, or a
bigger house, or whatever.

Speaker 4 (21:06):
It is.

Speaker 3 (21:06):
Always constantly comparing your own unique journey, your own unique successes,
and your own unique challenges to theirs will inevitably steal
your joy, read resentment, and create an endless sense of inadequacy.
It's a losing game. The powerful liberating advice here is simple,
yet profoundly difficult to practice. Run your own race. Your
financial journey is uniquely yours, shape by your own values,

(21:28):
your own goals, your own circumstances. Its success should be
measured against your own definition of enough, not again someone
else's perceived achievements, which you probably don't even see accurately anyway.

Speaker 1 (21:37):
And finally, perhaps the most critical lesson of all, one
that provides a foundational blueprint for living a fulfilling life
rich in every sense of the word. Identify the things
in your life that are genuinely priceless. These are the
things that are therefore not worth risking, regardless of the
potential game full stop. These aren't just abstract concepts. They

(21:58):
are the concrete, invaluable pillars of a well lived life.
Your reputation, your freedom to make your own choices, your
independence from the whims of others, your precious family, your
support of friends, the love you share with those dear
to you, and you're enduring happiness and peace of mind.
If you want to keep all of these invaluable things
with you securely in your possession, you need to develop

(22:20):
the wisdom and the discipline to know when to stop
taking risks, when to walk away from that tempting one
while deal that extra bit of potential gain that could
jeopardize everything else. Knowing enough isn't just about a number
in bank account. It's about having the profound clarity to
know when to stop gambling with your entire, irreplaceable life.

Speaker 3 (22:37):
This profound wisdom around knowing enough leads us naturally into
Part four, which delves into leveraging, the unassuming power of
time and finance, and also the often overlook challenge of
sustaining wealth once it's acquired two sides of the same coin. Really,
our first point in this section is the truly unassuming
power of compounding.

Speaker 1 (22:55):
Yeah, compounding, It often sounds like a technical, almost dry
financial term, does something relegated to textbooks at complex equations,
but at its heart, it's really about patience, consistency, and
the well the magic of exponential growth over long periods.
We devour countless books about investing, many of them truly
excellent that meticulously detail how titans like Warren Buffett built

(23:17):
their colossal fortunes. Buffett's fortune and astonishing eighty six point
five billion dollars at the time the source material was written, is,
without a doubt, the result of truly phenomenal investing skill
and shrewd decision making. Nobody denies that. But here's the kicker,
the secret ingredient. Many overlook the silent partner and his
incredible success. Over ninety ninety percent of his monumental assets

(23:38):
were accumulated after he turned fifty years old. His skill
is undeniable. That his true, unreplicable secret is time. It's
not just skill, but skill applied consistently over an exceptionally
long time horizon.

Speaker 3 (23:49):
That incredible fact vividly highlights how compounding truly works its magic.
It's not about earning the absolute highest one off blowout
returns that tend to be difficult, if not impossible, to
repeat consistently year after year. That's chasing lightning. Good investing,
according to the insights we're exploring, is far less about
hitting home runs and much more about earning consistently pretty

(24:10):
good returns, returns that are solid, repeatable, and critically that
you can stick with for very very long periods, allowing
the magic of exponential growth to unfold without interruption. As
Charlie Munger, Buffett's brilliant longtime business partner, so wisely put it,
the first rule of compounding is never to interrupt it unnecessarily.

(24:31):
Just let it run. Think of it like a snowball
rolling down a very long hill. It starts small, almost imperceptible,
but as it rolls it picks up more snow, gathering momentum,
growing larger and larger until it's this unstoppable force. The
early part of the journey is slow and looks like
almost nothing is happening. You might get discouraged, but that's
where the foundation for the truly massive, exponential growth.

Speaker 4 (24:52):
Later on is laid.

Speaker 1 (24:53):
That's such a great analogy the snowball, or like planting
a tree. Maybe in the first year or even the
first few years, you won't much progress. It might look
like a twig. You might not even notice it's there
amongst the other saplings. In ten years, okay, you'll certainly
start to see a significant difference and discernible shape forming.
It looks like a tree now, But in fifty years
you will have created something truly extraordinary, a magnificent, towering

(25:16):
structure with deep roots and sprawling branches that seem to
grow almost effortlessly towards the end. Yet it took decades
of patient, consistent growth. The biggest challenge, the author points out,
isn't necessarily picking the absolute right stocks or finding the
next hot trend before anyone else. That's hard, but maybe
not the hardest part. The hardest part is staying on

(25:38):
your feet through life's unpredictable ups and downs, staying in
the game. That means having the resilience, the financial stability,
and the sheer emotional patience to allow that long term
growth to materialize, even when the world throws curveballs your way,
even when the market is volatile and scary, and even
when doubt starts to creep in and whisper that maybe
you should just get out. It's about being there, present,

(25:59):
and invest for the long haul endurance.

Speaker 3 (26:02):
And this brings us to a crucial distinction that's often
completely overlooked in the vast, noisy landscape of financial advice,
the fundamental difference between getting rich and staying rich. Most
financial gurus, most of the best selling books, and indeed
most of the public discourse, focus almost entirely on how
to accumulate wealth how to make it. It's a popular, exciting,

(26:24):
aspirational topic. Everyone wants to know how to get to
the top of the mountain, right, but the conversation often
just stops there. It neglects the equally if not more important,
and far more challenging discipline of maintaining your wealth once
you've acquired it. Getting to the summit is one thing.
Staying there without falling off is entirely another challenge. Requires
different skills.

Speaker 1 (26:43):
It's absolutely true. It's the difference between a sprint and
a marathon, maybe with the marathon being the harder, longer,
and arguably more important part for long term well being.
The author argues, there's only one reliable way to stay rich,
a powerful, almost paradoxical combination of frugality and paranoia. Now
those aren't exactly terms we typically associate with success or

(27:04):
cheer for are they. Frugality and paranoia? They conjure images
of penny pinching, maybe, deprivation and irrational fear, which sounds
utterly miserable, not exactly aspirational exactly.

Speaker 3 (27:14):
But here they're given a profound, nuanced redefinition, one that's
critical for long term financial stability and maybe counterintuitively, peace
of mind. Frugality in this profound sense isn't about deprivation
or being cheap for cheapness's sake. It's about a deep,
almost reverent respect for your capital, for the money you have.
It's about being profoundly intentional with every single dollar, understanding

(27:38):
its true value and deploying it with purpose, rather than
letting it slip away through careless spending, impulse purchases, or
the endless pursuit of status symbols. It's the conscious decision
to not spend money just because you can, but because
it genuinely aligns with your values and long term gulls
and paranoia. It's certainly not about crippling anxiety or seeing
threats everywhere. Instead, it's about cultivatating a healthy dose of

(28:00):
humility realism. Maybe it's the constant, vigilant awareness that what
you've painstakingly built can be lost. Nothing is guaranteed. It's
a deep understanding that the market, economic shifts, unexpected personal crises,
or even your own unchecked impulses and overconfidence can erode
well far faster than you accumulated it. It's a defensive mindset,
a commitment to protecting what you have. Because the world

(28:23):
is inherently unpredictable, you need that buffer.

Speaker 1 (28:25):
This mindset fundamentally shifts the focus from just aggressive accumulation,
which often involves taking bigger, bolder risks, to vigilant preservation
protecting the downside. It recognizes that wealth can be lost
much much faster than it's gained, sometimes overnight. It's a
strategic posture, a realization that the forces that can erode wealth,
unforeseen economic downturns, devastating market crashes, personal health crises, losing

(28:48):
your job, or even just our own human tendency to
grow complacent or overconfident after some success. These forces are
always present, always lurking. So while getting rich often involves
taking calculated risks, being bold, maybe being optimistic, and seizing opportunities,
staying rich demands a different kind of discipline, a cautious, humble,
and deeply ingrained commitment to protecting what you have painstakingly

(29:11):
built over years or decades. It's the recognition that the
real game isn't just accumulating, its enduring, surviving to play
another day.

Speaker 4 (29:18):
Right.

Speaker 3 (29:19):
This wise, cautious approach, particularly the acceptance of unpredictability, extends
beautifully to our next point in Part five, embracing imperfection
and planning for inevitable change, specifically the surprising reality that
you can be wrong, maybe even mostly wrong, in ventures
like entrepreneurship and investment, and still achieve enormous, even legendary success.

Speaker 1 (29:39):
Now this sounds truly counterintuitive, doesn't it, especially given how
we're often taught. We're conditioned from a young age, especially
in our education systems, to strive for perfection, to always
be right to get one hundred percent on the test.
Failure is bad. But if you want to venture into
the world of entrepreneurship or investment where outcomes are rarely certain,
you have to fundamentally understand that many things in the

(30:00):
world comply with what's known as the eighty twenty rule
or the Pareto principle the power law distribution. What it
means for investors, for example, is that seasoned professionals in
large enter capital firms or successful companies fully expect that
out of say one hundred investment decisions or new projects,
a significant percentage may be as high as eighty percent
will either fail outright underperform expectations, or simply not pan

(30:22):
out as hoped. They budget for failure. Yet these companies
and the individuals who run them still manage to thrive
and accumulate immense wealth. How does that even work mathematically?

Speaker 3 (30:32):
It works because extraordinary results, the truly big wins the
outliers are statistically rare events, but they're often so disproportionately
large that they more than cover all the smaller losses
in mediocre outcomes. The winners pay for all the losers,
and then some the source material sites, Heinzbergruin and admired
art collector. The reality behind his celebrated acumen wasn't just pure,

(30:55):
consistent insight into every single piece he bought. That's impossible.
He famously bought vast quantities of art, amassing a huge
collection over time, only a relatively small fraction of that
collection actually became truly valuable, iconic pieces that defined its success.
This means, in essence, he was wrong, or at least
not profoundly right most time about individual pieces. Yet he

(31:16):
managed to get it spectacularly right with a few key pieces,
which generated the overwhelming majority of his returns and secured
his reputation.

Speaker 1 (31:24):
You see this dynamic playing out everywhere once you start
looking for it, even in our modern entertainment landscape. Think
about a company like Netflix and its original series production.
They famously produce a huge volume of content, hundreds of shows, documentaries,
and films every year, a fire hose of content, But
how many of those truly achieve significant global success, become

(31:44):
cultural phenomena or when major awards, maybe a handful each year,
only if you really break through. The vast majority do
not reach that level of impact or viewership. They just
sort of exist, yet those few big hits are enough
to justify the entire massive enterprise to keep subscribers hooked.
Or consider the unparalleled investing track record of Warren Buffett. Again,

(32:05):
he himself has openly admitted that he has owned shares
in over four hundred different companies throughout his lifetime, but
the most significant, truly wealth generating gains came from only
about ten of them. Just ten key decisions drove the
bulk of the results. This perspective is incredibly liberating, isn't it.
It completely normalizes failure. It makes it part of the process,
not an exception. It tells you that it's not only

(32:25):
perfectly normal, but often expected for many things to fail,
or go wrong or just be mediocre. It encourages persistent
effort and bold experimentation, knowing that you don't need to
be right every single time, You just need to find
and maybe more importantly, hold on to those few big
winners that make all the difference in the long run.

Speaker 3 (32:44):
Following on from that acceptance of imperfection, another crucial truth
when planning for the long term, especially financially, is the
inevitable reality that you will change, and so will the
world around you constantly. Long term financial planning is inherently complex,
precisely because nothing is static that your goals, not your desires,
not your circumstances, and certainly not your personality.

Speaker 1 (33:06):
It sounds so simple on the surface, doesn't it, Just
plan for the future easy? But we're all, to some
extent subject to what psychologists call the end of history illusion.
It's a fascinating cognitive bias. We're acutely aware at how
much we've changed in the past. Our tastes, our opinions,
our goals, our very selves have shifted. We look back
at our younger selves and think, wow, I was so different,

(33:27):
maybe even cringe a little. But we consistently and often
dramatically underestimate how much our personalities, our desires, our core values,
and our life objectives are likely to shift in the future.
We assume the person making these grand financial plans today
will be essentially the same person executing those plans in ten, twenty,
or even thirty years, and that's often just not the
case at all. Life happens, we evolve.

Speaker 3 (33:49):
The source illustrates this perfectly and quite poignantly. But the
story of the author's friend, this friend doing his adolescence
in early adulthood, passionately dreamed of becoming a doctor. It
was his entire focus. He dedicated immense effort, countless hours,
and significant financial resources to achieving this demanding goal, overcoming

(34:09):
numerous obstacles along the way, he made it. Years later, however,
the author reconnected with him, and to their surprise, this friend,
now a practicing doctor in the prime of his career,
expressed profound regret for choosing that path. He called his
chosen career horrible. He found the reality of the profession
utterly draining and devoided the satisfaction he had envisioned all

(34:30):
those years ago. The dream didn't match the reality for
the person he had become. This isn't an isolated incident,
of course. Countless people find themselves in careers or life
situations they once coveted, only to discover their true self
has moved on, their priorities have changed.

Speaker 1 (34:44):
This profound truth isn't a reason not to plan, though
that's not the takeaway. Far from it. Planning is still essential.
It's a powerful warning to approach long term financial planning
with prudence and wisdom, consciously leaving ample room for adaptation, flexibility,
and pivots along the way decisions that seem absolutely perfect,
perfectly aligned with your desires and circumstances right now today

(35:07):
may end up looking completely crazy or fundamentally misaligned in
ten or twenty years, simply because you have changed or
your external context has shifted dramatically. Technology changes, the economy changes,
your family situation changes. This encourages us to regularly review
our long term financial strategies, not treat them as set
in stone, to build an adaptability, perhaps through diversification of

(35:30):
skills not just assets, or maintaining some liquid savings for flexibility,
or setting more open ended, value based goals rather than
hyper specific ones. It's about building a financial framework that
can evolve with you, rather than locking you into a
path defined by a past version of yourself who simply
didn't know what the future held because none of us do.

Speaker 3 (35:47):
Okay, now, let's delve into Part six, which helps us
navigate the complex, often unpredictable financial landscape with more clarity, resilience,
and a deeper understanding of reality.

Speaker 4 (35:56):
Practical stuff.

Speaker 3 (35:57):
First up, the essential buffer often referred to is room
for error, margin of safety.

Speaker 1 (36:01):
This concept is incredibly important, yet so often overlooked by
individuals and even sometimes institutions. Surprisingly, true, financial failure, the
kind that can really derail your life, doesn't necessarily come
from making one single bad investment decision or choosing the
wrong stock. That usually doesn't sink you unless you bet
the farm. More often, it stems from a fundamental inability

(36:23):
to withstand setbacks, an inability to absorb the inevitable shocks
that life and markets will throw your way. It's not if,
but when. This makes it absolutely crucial to anticipate and
deliberately prepare for adverse outcomes by consciously building in room
for error within your financial structure. Think about it, betting
all your eggs in one investment basket, however great it seems,

(36:45):
Or relying solely on your monthly balory to fund your
short term spending needs without any substantial savings quish to
protect you from unexpected expenses. These are extremely precarious, risky
positions to be in. The harsh, undeniable truth. The financial
equivalent of Murphy's lif is this, if something can break,
it will break Eventually. Life happens, cars break down, roof sleek,

(37:05):
people get sick, jobs are lost.

Speaker 3 (37:07):
Right, and this is where our planning often falls short.
I think we focus On the upside, we tend to
meticulously plan our savings for specific positive goals. A hefty
down payment on a dream home, an amazing round the
world vacation, a comfortable retirement fund. These are all worthy,
motivating goals, of course, but the sobering reality is we
don't truly know what the future holds. We don't know
what expenses are coming. We need savings and flexibility for

(37:31):
the unknowns, for the unexpected expenses, for the adverse events
that are by definition unpredictable. This isn't about being pessimistic
or living in constant fear. It's about being pragmatic, realistic,
and frankly incredibly smart. It's intelligent planning. It highlights the
critical importance of diversified investments, yes, but maybe even more
so robust emergency funds, HASH reserves, liquidity. These aren't just

(37:56):
luxuries or optional extras for the wealthy. They are fundamental,
nong sociable safety nets, absolutely essential for navigating life's inevitable
uncertainties without being completely derailed financially or forced to sell
good assets at the worst possible time. True financial planning
doesn't mean rigidity. It means leaving ample room for the unplanned,
expecting the unexpected.

Speaker 1 (38:16):
Financially speaking, that's a fantastic way to put it. It's
the difference between just planning a perfect road trip on
a sunny day and actually packing a survival kit in
the trunk for whatever weather or breakdowns you might encounter
along the way. You need both. And speaking of planning
and hidden truths, let's talk about something else that often
goes unacknowledged, the hidden price of everything. Success in any endeavor,

(38:38):
but especially in finance and investing, always comes with a price,
and that price isn't always monetary or immediately obvious. There
are hidden costs.

Speaker 3 (38:47):
This is a profound insight, one that shifts our perspective
from simple cost benefit analysis on paper to a more
holistic understanding of the real trade offs involved. We tend
to focus solely on the tangible, measurable cost the capital invested,
hours worked, the management fees paid, things you can put
in the spreadsheet. But the true price of success as
an investor, for example, isn't just the money you put

(39:08):
into the market. It's also the uncertainty, doubt, and fear
related to market volatility, that emotional roller coaster when the
market takes a sudden gut wrenching dive, that pit in
your stomach, those sleepless nights spend staring at the ceiling,
wondering if you made a huge mistake. That gnawing feeling
of anxiety. That's part of the price you pay for
potential long term gains when everyone else seems to be

(39:30):
making money hand over fist in some hot new thing
and you're sticking to your boring long term plan. The
emotional cost of missing out the fomo that is also
part of that price.

Speaker 1 (39:39):
Exactly. Volatility and uncertainty aren't obstacles to be avoided at
all costs, or unforeseen glitches in the system that need fixing.
They are, in essence, the cost of admission and the
fees to pay in the investment world. They are inherent
to the game, part of the deal. The secret, the
author suggests, is to fully accept this reality, to internalize it,
to accept it as as an inherent, non negotiable part

(40:01):
of the deal. Like the price of a ticket to
a potentially great concert, you pay the price to get in.
You have to convince yourself mentally and emotionally that the
potential reward down the road is ultimately worth This often uncomfortable,
non monetary price you pay along the way. Before you
embark on any venture, especially as significant financial one like
long term investing, you must first diligently try to identify

(40:23):
what it's hidden costs are, the emotional toll, the psychological strain,
the sacrifice of time or peace of mind, the uncertainty
you'll have to endure, and then honestly ask yourself if
you are willing, truly willing to pay them consistently over time,
Because if you're not willing to pay the price, if
you can't stomach the inevitable volatility or the uncertainty, you
simply won't stick around long enough to experience the potential price,

(40:45):
you'll bail out at the worst time.

Speaker 3 (40:47):
It's that simple, right, And this deep understanding of hidden
costs and necessary trade offs leads us to our final
point in this section, one that's absolutely crucial for avoiding
major financial pitfalls and making smart persons lize decisions. Knowing
your game. Everyone out there operates with different financial agendas,
different time horizons, different goals, and different incentives vastly different,

(41:09):
sometimes blindly following the advice. The actions are the signals
of others without truly understanding their game, why they're doing
what they're doing, can lead you directly to financial ruin
or at the very least, immense frustration and suboptimal results.

Speaker 1 (41:22):
It's an incredibly common trap, and history is just littered
with devastating examples. So many think of any major financial
bubble throughout history, the Dutch tulipmania way back when, the
dot com bubble in the late nineties, the housing market
crisis in two thousand and eight. A common denominator in
virtually all of them is individual investors innocently, perhaps greedily,

(41:43):
following the signals and actions of other investors who are
actually playing a fundamentally different game than their own. They
got caught up in the hype. Imagine a conservative long
term investor, maybe someone focused on decades of slow, steady
compounding for retirement, suddenly mimicking the frantic buying and selling
the speculative bets of a short term day trader whose
entire goal is to make a quick profit within hours

(42:05):
or days. Their objectives, their time horizons, their risk tolerance,
their entirely fundamentally different worlds apart. The long term investor
is trying to build a castle brick by brick the
day trader is playing high stakes poker. You can't use
poker strategy to build a last in castle. It just
doesn't work.

Speaker 3 (42:20):
This is a powerful, almost life saving warning. Really, it
is absolutely paramount for each individual investor, for each of
us listening. To identify what game you're playing, be explicit
about it. Are you saving for retirement decades away, focused
on long term gross and capital preservation, or are you
trying to generate immediate income to live on, or perhaps
engage in high risk, high reward speculative plays with money

(42:43):
you can afford to lose.

Speaker 4 (42:45):
Be honest.

Speaker 3 (42:46):
Are you investing in value seeking out overlooked undervalued assets,
or are you chasing explosive growth and exciting new industries.
Once you have a crystal clear understanding of your own
unique objectives, your personal time horizon, your genuine risk time
not what you wish it was, and your personal definition
of enough, only then can you confidently select a strategy

(43:06):
that has the best chance of successfully meeting your specific
goals aligned with who you are. This insight encourages independent,
critical thought and deep self awareness, rather than just falling
victim to hurt, mentality or blindly following someone else's path
that was never designed for your destination.

Speaker 1 (43:21):
Okay, and finally we come to Part seven and enduring
battle that shapes so much of our perception, our decision making,
and our long term outlook on life and finance. The
constant tension between optimism and pessimism, specifically the seductive, almost
irresistible power of pessimism. Why bad news travel so fast
and get so much attention?

Speaker 3 (43:39):
Have you ever noticed how many people seem to just
gravitate towards tragic messages or listen intently to the profits
of disaster you see on the news or all over
social media. It's constant. It's almost as if people find
a strange comfort or maybe even a sense of intellectual superiority,
in hearing that the world is constantly going to hell
in a handbasket, that everything is falling apart. This is because,

(44:03):
quite simply, pessimism often sounds smarter, It feels more realistic,
more grounded. It carries a natural, deeply ingrained evolutionary appeal.
After all, biologically speaking, organisms throughout history that treated threats
as urgent, that constantly anticipated the worst were probably more
likely to survive and reproduce. Caution kept you alive. Our

(44:23):
brains are kind of hardwired to prioritize warnings to spot
dangers because that kept our ancestors from getting eaten or
falling off cliffs. So pessimism often feels like intellectual rigor,
like you're seeing the harsh reality, while optimism can sometimes
feel naive, maybe even foolish.

Speaker 1 (44:38):
It's so true, and it plays out in the headlines
every single day, you can see it constantly. The source
gives a striking, almost comical example in hindsight of this
kind of catastrophic thinking. A Wall Street Journal article published
back in the day by a Russian professor soberly warning
of the imminent breakup of the United States by the
year twenty ten. Seriously imagine reading that on the front
page of a prestigious newspaper. Serious predictions like Alaska inevitably

(45:02):
coming under Russian control, California becoming some kind of Chinese
influenced republic wild stuff. These catastrophic doomsday predictions gain immense
prominence and are often taken very seriously at the time
because they tapped directly into that primal survival oriented fear
that lies deep within us. Were wired to pay attention
to threats however outlandish they might seem in retrospect.

Speaker 3 (45:24):
However, and this is the crucial counterpoint. Despite the natural
evolutionary draw of pessimism and the constant drumbeat of potential
crises and impending doom, long term optimism is generally overwhelmingly
the better bet for consistent human progress and economic recovery
over the long haul. History tends to support this. The
profound historical example of Japan after World War II illustrates this.

(45:48):
Perfectly utterly destroyed by defeat, its major cities and ruins
its infrastructure, decimated, its economy, and complete shambles. It would
have seemed utterly fantastical, beyond the realm of possibility back
then to predict that Japan would not only recover but thrive,
to predict it would transform itself into one of the
world's leading economic powerhouses in just a matter of decades.

(46:08):
Yet against all pessimistic odds, against every rational calculation of
declined at the time, it did. It's a powerful testament
to the power of human ingenuity, resilience, and yes, underlying optimism.

Speaker 1 (46:20):
So what does this all mean for us as individuals
navigating our financial lives in a world that often feels
chaotic and uncertain. It means that despite the inevitable challenges,
the setbacks, the recessions, the pandemics, the crises which will
always happen, the world tends to improve for most people
most of the time. Over long stretches, the trend line
is generally up. The fundamental driving reason, the desire to survive,

(46:43):
in the pursuit of profit, or maybe just the pursuit
of a better life, inherently drives people, businesses, and nations
to seek solutions, to innovate, to adapt, and to overcome adversity.
Necessity truly is the mother of all innovation, and the
drive for a better life and economic advantage are incredibly
powerful persistent forces. Without optimism, Without a fundamental belief in

(47:06):
the possibility of improvement and progress, the very creation of
these solutions becomes impossible. You wouldn't even try if you
thought it was hopeless. It's a powerful reminder that while
vigilance and caution are certainly wise, a foundational belief in progress,
in human problem solving capacity, and in the enduring human
spirit is what ultimately propels us forward, both individually and
our financial journeys and collectively as a society. Wow, We've

(47:29):
covered a vast, intricate landscape today, haven't we Peeling back
the layers on the hidden psychology of financial success. We
started with that deeply personal psychology that shapes our individual
financial behaviors, understanding why from our own perspective, no one
is truly crazy with money. It all makes sense from
the inside. We then explored the often invisible forces of
luck and risk, recognizing their profound, often unacknowledged role in

(47:53):
outcomes humbling stuff. We delved into the critical importance of
defining enough for yourself and thes of that endlessly drifting
goalpost finding contentment. We then unlocked how time is the
true secret weapon in compounding wealth, and distinguished between the
strategies for getting rich versus the even more challenging discipline
of staying rich. Defense matters. We embraced imperfection, understanding that

(48:16):
you can be wrong most of the time and still
win big if the winners are big enough, and acknowledge
the inevitable truth that both you and the world will change,
requiring flexible financial planning adaptability. Finally, we navigated the complex
financial landscape by building in room for error, understanding the
true hitting costs of success beyond just money and critically
knowing your own unique financial game amidst the noise and

(48:38):
signals of others.

Speaker 3 (48:39):
Yeah, it's become abundantly clear throughout this discussion. I think
that genuine financial success is far less about mastering complex formulas,
or predicting markets perfectly or having the highest IQ. It's
infinitely more about mastering human behavior, your own primarily. It's
a nuanced, often counterintuitive dance between understanding your own motivations

(49:00):
and biases, acknowledging the powerful external forces beyond your control,
like luck, and consciously choosing a path that aligns with
your deepest values and your personal definition of the good life.
This deep dive into the hidden psychology of money is
really designed to equip you, the listener, with a perspective
that goes profoundly beyond just the numbers on a spreadsheet,

(49:21):
fostering a deeper, more empathetic, and ultimately more effective understanding
of how we all interact with wealth and how we
can achieve true financial peace, whatever that looks like for
each of us.

Speaker 1 (49:31):
And with that, we leave you with a final thought
to mullover, something to carry with you as you navigate
your own unique financial journey. Hopefully equipped with some of
these insights.

Speaker 3 (49:40):
Reflecting on everything we've explored in this deep dive today,
maybe consider this, what financial belief or behavior, perhaps one
you've always taken for granted as just the way things are,
might you now see fundamentally differently after hearing this, and
perhaps more practically, how am I truly embracing the profound
power of defining enough for yourself or consciously accepting the

(50:02):
often uncomfortable, constant admission to investing, the volatility, the uncertainty.
How might that acceptance reshape your very next financial decision?
How might it steer you towards a path of greater peace,
greater freedom, and more genuine sustainable wealth

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How to Build Wealth Without Being “Smart”: The Truth About Money (Lessons They Don’t Teach in School)

NFL Daily with Gregg Rosenthal