(Via ZEX PR WIRE) Financial advisors have to compete with a ton of free advice on how to invest. It’s usually worth exactly what you paid, but people believe what they see on the internet anyway, so it’s hard to get through the noise. Then there’s human nature to deal with. Regardless of someone’s age or financial situation, planning one’s spending goals and investment options is usually first on the list of things to do last—if at all. This will lead to enormous wealth forfeiture—and regret.
Thankfully, there’s a new book, Paul Heys’ Spending Your Way to Wealth, outlining a concise, no-nonsense approach to securing future wealth and satisfaction. This is much more than a “how to invest” primer or an investing book for beginners. Rather than reciting what to look for in a good investment, Heys helps the reader know more about themselves—and what it takes to be a good investor. It can also help a person become a better client of a financial advisor. The resulting book is a concise, and often humorous look at a concept the author has dubbed Investorship.
Who’s Buying the Book?
Not surprisingly, financial advisors and others with intellectual and financial capital (and a desire to see others succeed) are recommending the book—and often buying it to give to clients and friends. They understand its core financial philosophy, but also realize that they may not always have the greatest potential to help shape other people’s minds. The message about wealth and spending is usually most effective when a person discovers it for themself. The book accomplishes that for those who receive it as a gift.
People and organizations that have purchased the book are buying multiple copies to give to those they know will benefit from it. A non-profit financial education foundation recently purchased copies to present to their school district’s graduating seniors. Another financial advisor bought a large number of the books that they gave to a school district on whose board they served. Another purchased books to be used as client appreciation gifts. One such buyer noted that it was a thoughtful marketing tool to help develop and expand their businesses.
Heys described a number of benefits to financial firms, schools, and individuals adopting the book gifting approach:
“It helps to inspire the recipient to adopt a spending and investing philosophy that can virtually guarantee their future financial success. It also provides the recipient with a book that the giver wishes someone had given them years earlier. Most of all, it represents a gift that can go on giving through the recipient’s lifetime.”
Heys continued, “It also creates good will and appreciation for the giver. It enhances their image and reputation as someone with keen insights, extensive knowledge, and great wisdom.”
The Financial Advisor’s Role
Heys knows the value of having the right sort of financial advice, especially from someone who always acts in their client’s best, long-term interests. These professionals, he maintains, serve as a buffer against a client’s impulsive nature, helping them avoid bad decisions triggered by volatile market price changes.
Heys’ Investorship philosophy is the result of long experience as an investment professional. He recalls two clients who bought the same stock on the same day—for twenty-one dollars a share. The next day, when the price rose to over thirty-five dollars (up 75%), one client sold the stock for a tidy $1,400 (70%) gain. However, the other client waited and, five years later, saw the price of their investment increase by 2,500%.
Heys has spent the greater part of his career—and after retirement—seeking answers as to why people do this. Until now, there had been few books describing human behavior related to spending and investing. As a rule, most were rather long and technical. So, he decided to capture the basics in this delightful, practical book for investors of any age.
Becoming a Wise Spender
In the book, Heys points out that wealth means far more than money, and includes things like personal satisfaction, friendships, and good memories. But he also notes that having monetary wealth—even after the paychecks stop coming—is essential to acquiring the less-tangible, non-monetary wealth in the future.
The premise of the book is that it’s possible to go beyond our normal cognitive biases when it comes to spending. While explaining things like the difference between price and value, he also shows us how to exercise our “Normal PLUS” potential—what Nobel laureate Daniel Kahneman calls “System 2” thinking. Instead of responding reflexively to a short-term event, like a one-day drop in the stock market, one can instead pause, reflect, and manage how one allocates their money. He even provides an online Investorship Calculator (investorship.com/calculator) to reveal the long-term results of seemingly trivial spending. For example, a monthly allocation of $250, if spent towards an S&P 500 index fund rather than on optional, depreciating assets, would likely be worth over $200,000 in twenty years—or over $1.7 million in forty years.
Heys’ Investorship concept is not something found in ordinary books on how to invest or what to invest in. You certainly won’t find it in an investing book for beginners. Rather, as he puts it, “Investorship is a philosophy defining a body of knowledge, behaviors, and wisdom. These are the basis for explaining the difference between real investment success and mediocre investment results.”
Everyone Needs Help Doing the Right Thing
Even armed with the wisdom of this Investorship philosophy, most normal investors will need support in their financial journey. Heys is quick to point out that a good financial advisor can be critical to lasting success.
“People’s tendency to react in the moment is a habit that’s hard to overcome. For a person trying to lose weight, the impulse to open the fridge or take that extra cookie is powerful, and seemingly irresistible. Likewise, the impulse to sell when the stock ticker turns red is hard to resist. A sound financial advisor, like a good diet coach, will help put things in context, bring calm to the discussion, and remind the client of the value of long-term goals.”
Heys’ book includes a number of helpful techniques along these lines. The theme of these is to reduce the noise that stimulates a reflexive or fear-driven response. Instead of setting automatic stock alerts in one’s brokerage account app, he recommends disabling them—or not installing the app in the first place. Rather than checking account status every day or week, the book points to reviewing accounts monthly or quarterly—preferably with an advisor. Following Kahneman’s lead, Heys encourages habits that are based on reflection, not reaction, and are reinforced by calm, knowledgeable advice.
The book also explains basic concepts like “spilling” (the allocation of small amounts of money for things that decrease in value—and forfeit future potential wealth) and the difference between price and value. A telling parable from the book makes the point:
“…imagine a stranger coming to your door, offering you money for your house or condo right now. If his price is ridiculously low, you will probably close the door—and perhaps call the police (or suggest counseling). If it is ridiculously high, you might accept it as a windfall—if he is not actually mad. But if the price is anywhere in between, you will almost certainly just say no… [The house] has value worth more to you than any price he has to offer…
“Now, relate that unlikely scenario to investments. If a stock or fund has value in the long term, and you have no immediate need to sell it, then almost no price will be acceptable. However, with investments there is a ‘stranger at the door,’ quoting a different price every day. Whether it’s a mobile investment app, a too-frequent portfolio review, or a cocktail party conversation, the price message is persistent, and almost always unrelated to a portfolio’s long-term value.”
All in all, Spending Your Way to Wealth is a treasure. It’s a significant opportunity for financial firms, schools, and civic groups to benefit their constituents—and boost their own reputation in the bargain.
As one reviewer noted, “I wish someone had given me this book when I was younger. It would have directed my spending and investing in ways that would have made me rethink my career, relationships, and what I truly wanted out of life. I am grateful I have it now for financial guidance and easy reference. Spending Your Way to Wealth is the kind of book that changes lives.”