The Real Deal Isn’t Fake

After College I remembered a friend’s Mom making the statement “fake it till you make it.”  She was referring to her son who had just changed jobs.  He lived paycheck to paycheck while still living at home.  His new job was as a Financial Consultant for a stock brokerage company.  When he started he went out and leased a big new red Mercedes sedan. He didn’t own anything, so the car gave him an image. Although it was a fake image.

The finance industry, especially the investment side, has a lot of fakeness.  It’s common to see the bank’s young investment sales guy getting into a fancy car.  This is opposite of the image of Sam Walton (founder of Walmart) driving his Ford pickup truck wearing jeans. Walton was worth millions. The young banker is maybe worth shit?

If you’re living below your means you most likely don’t have your money tied up in a car.  Sam Walton and Warren Buffett are good examples.  There are other not so famous examples of this mindset that aren’t household names.  See my article “Wisdom: Investing vs Savings.”

Madoff was Fake

When I think of faking it till you make it criminals like Bernie Madoff come to mind.  Many people invested their money with Madoff because he purported to provide a ten percent per year return each year.  For anyone that knows investing a ten percent per year return each year without down years is very difficult.  Madoff had a penthouse, a big boat, and a fancy car. 

So how do you protect yourself from the fake.  Focusing on the person rather than the marquee is a good start.  In order to survive black swan events and difficult times good money choices are defensive. Duration as the primary concept is wise. 

Choosing help where they don’t actually hold your money is another good choice. You’ll have direct access to the funds held in the account, and it would be very difficult for someone to forge your monthly statements as Madoff did.  Firms like Schwab and Fidelity offer these types of programs with outside Advisors.

Fake is not saving

Be realistic. The chances of becoming a multimillionaire overnight is very slim.  Focus on the long term and remember that the law of numbers applies.  Time is a number, so you need lots of it.

When it comes to investing, guys like Warren Buffett lived very meekly for years when starting out and raising money.  He invested his money alongside his investors, and that can be a good sign.  Buffett never sold insurance, annuities, or one time products directly to his clients either. 

Also, stop worrying about what you don’t have, and instead focus on simplicity and what keeps you happy. Maybe not worrying about keeping up with the Joneses? You’ll probably find that your true happy place probably doesn’t involve a lot of material items.  Instead, simplicity.