Each week, The Colorado Sun and Colorado Humanities & Center For The Book feature an excerpt from a Colorado book and an interview with the author. Explore the SunLit archives at coloradosun.com/sunlit
Tired of piecemeal advice books that didn’t provide a holistic view of how finances work, Colorado investment adviser Chad Gordon decided to write one of his own.
His book aims to not only be a clear explanation of how finances work, but how they fit into a life worth living.
The following is an except from Gordon’s book, “Wealth By Virtue.”
2018 Colorado Authors League winner for General Nonfictiono
From the Introduction
Most people share a central fear: that at some point in their lives, they will need money and not have it. Not just that. We fear finding ourselves in the horrifying position of desperately needing money and not having it. Throughout my career in financial services, I’ve found that people are hungry for direction. The vast torrent of available knowledge seems to cause as much confusion as clarity. As the flood of information rises, bad advice has become harder to filter out.
The internet has brought us the gift of information, but we still have to apply it to our own lives. It’s one thing to use the internet to learn how to unclog your sink; it’s another to YouTube your family’s financial planning.
In the journey to financial security, many of us sail our metaphorical boats without navigational tools. Sometimes luck gets us further than it should. We sail smooth waters hoping they stay calm, and react to the frightful storms with short-term thinking. In the pouring rain and turbulent sea, all of our hopes collapse to the single concern of staying afloat. We forget our lifelong goals and jettison the tools we’ll need to survive beyond the storm. Wise financial decisions chart a longer-term course where luck is not a factor, hope is never a strategy, and fear is not an option.
Great accomplishments begin with a courageous and honest assessment of the facts. If you are fighting a war, you must know the strength of your enemy. If you are building a bridge, you must know the span length. If you want to maximize your wealth, you must face the brutal facts about who you are, where you are, and what you need. Recognize the facts about your assets, debt, and income, but also know who you are — as a psychological and biological creature you are prone to getting in your own way. It is not just investing, but behavior during the voyage, that creates wealth.
This book is about how to think about money in a constructive and cohesive way. If you are looking for something in the get-rich-quick genre, look elsewhere. Then set it on fire. I have known many wealthy people. Not one of them keeps a shelf of get-rich-quick books. But many possess libraries about principles, wisdom, and approaching the world with a balance of caution and boldness.
If you are like most people, you can identify with the fear that at some point in your life, you will need money and not have it. The answer to this fear is within these pages. It is a balance of strengthening your finances, protecting your assets, and recognizing the system in which you live. It is not just a game of numbers, but a game of psychology—especially your psychology and the psychology of your advisors.
My goal is to provide you a basis on which to become a discerning consumer of financial information. Just as it would be foolhardy for me to try to make this book encyclopedic, it would be foolish to believe that you can learn enough in a single book to not need professionals. This book will empower you to make decisions about how to structure your finances and give you the foundation to choose the right professionals to advise you. It will also help you make educated decisions when you find yourself in a position where you are being sold to, rather than advised. This book exists to empower you as someone who makes investments rather than a buyer of financial products.
Education is power. Uninformed people are vulnerable. Ignorance hinders freedom, and freedom and independence are among the most important sources of human joy.
And joy is where it gets tricky. Years ago I began advising a lovely couple. They were very kind, and the most frugal people I had ever met in my life (this is saying a lot; I come from a Scottish family). They lived in a trailer home located in a less-than-desirable part of town. They rarely splurged on eating out or traveling. They shopped at thrift stores when they occasionally updated their clothing. And … their net worth was well over a million dollars. They were—literally—trailer park millionaires.
When I first met with them, their needs were a mix of issues ranging from optimizing their investments, legal planning, and using insurance to prevent their heirs from being excessively taxed. After we had established our mutual game plan, I asked them rather bluntly, “What’s the point?” They looked at me funny and I clarified, “Let’s say we get everything optimized, let’s say your portfolio doubles or triples … so what? What would it do for your lives, what would change?”
This question visibly made them uncomfortable. As they squirmed I said, “Let me tell you a story.”
Early in my career I worked at an old fashioned savings and loan bank. We offered the best rates in town, and this attracted a certain kind of customer. One emblematic individual was Mr. Tonlin. He was meticulous in his management of his $4,000,000, which was divided among fifty or so accounts with different maturity dates. He would come in every week with his list on a clipboard held proudly to his chest and carefully make decisions about which ones to get, haggling with management for better rates. He carried the air of a business magnate from the Industrial Revolution. This was his pride and joy. Then, after years of this routine, his wife passed away.
Mr. Tonlin came in the afternoon after the funeral—perhaps to get some grounding in his routines. He seemed like he had lost six inches of height. He came into the bank lobby expressionless, posture limp, disoriented. Various staff came up to him, expressing their condolences. He ambled to the counter holding his clipboard, which now seemed to be very heavy to him. We waited for him to say something as he looked at the list. Then quietly, looking down at his clipboard, his chin quivered and his eyes welled up, “I should have spent this money with her. What am I going to do with it?”
It’s been over a decade since this happened. I would bet that a week hasn’t gone by that I haven’t thought of that man and this single phrase.
After telling my clients this story, I repeated the question to these trailer park millionaires, “What’s the point?”
I believe that those who have saved up deserve the reward of minimizing their fears about money while maximizing their energy for the real things of life. Ask yourself: what is the point? This is not a rhetorical question. If you and I optimize your financial life, leaving no stone unturned, what’s the point? What would change? What should change?
To me, the point is this: you should have the luxury of diverting your emotional energy away from worrying about money. Spend that same energy on more important things like family and friends, pursuing goals and experiences, enjoying life, or giving back to the world. The emotional cost of financial chaos is profoundly impoverishing. Bringing order to chaos will enable you to divert your energy to the things that enrich your life.
Financial strength is not about having a lot of money. The ancient Romans had a saying, “Money is like seawater. The more you drink, the thirstier you become.” As you grow in wealth, you must also grow in wisdom.
“Wealth” is not a certain amount of accumulation, or the territory beyond a numerical line in the sand. Wealth is the absence of financial worry. Wealth is an internal sense of freedom. When you retire, your financial life collapses down to one core binary question: Will your money outlive you, or will you outlive your money?
From the Epilogue
People ask me what “Wealth by Virtue” means. I have always taken it to mean two things. First, I believe that the most probable path to wealth is virtuous. Obviously, plenty of people collect ill-gotten gains, but I believe that the virtues of patience, steadfastness, humility, moderation, perseverance, faith, and optimism, applied to finances, make wealth almost inevitable. They certainly grow wealth relative to the resources at hand.
The second meaning of wealth by virtue is the need to maintain a virtuous perspective. Globally speaking, if you own a toilet, you are wealthy. Ever since I was a child, I’ve felt that I won the lottery to be born an American. As I’ve aged and traveled, although my childlike awe has matured, I still believe this. A global perspective helps me recognize that I’ve been given a massive leg up in life. I know that if you took my same brain and abilities and put them in the body of someone in a remote village in a developing country, there’s no way I would reach where I reached in America. The wealth and success we achieve in life owes the majority of credit to the society and community in which we were born. There is no such thing as self-made wealth, and it is unforgivable arrogance to think otherwise. An enormous portion of success in America stems from a societal boost that simply isn’t afforded to all people in the world. This realization should breed a virtuous perspective, and a sense of gratitude. Recognizing your good fortune creates empathy for those without it. It costs nothing to regard your wealth from a global vantage point.
This virtuous perspective of wealth must also reach our families and relationships. My mind goes back to Mr. Tonlin, the man with four million dollars in the bank where I used to work. I can still see the look of sorrow of a man who, though he hadn’t lost a penny, lost all the value of his fortune the moment he lost his wife. I assume that his virtues of discipline and frugality enabled him to build his millions, but the virtue of perspective came to him at the end of his journey.
The mistakes we make in the pursuit of wealth can sometimes be quantified in currency and numbers. The most painful ones have nothing to do with our balances.
Although I’ve repeatedly said not to worry about the things you can’t control, I know that it’s hard. For me, I worry that the advice I’ve given you will only be applied in pieces and not as a comprehensive whole. I worry that in my advocating of a 100% equity portfolio or to invest, instead of paying down your mortgage, you set up the system and then forget to stay steadfastly in the market, despite your panic, when it drops horrifically. There are so many moving parts where investing can go wrong.
I believe that because of these complications, people need advisors. That is also why I believe that everyone who takes their financial security seriously must have a financial plan. The Six Areas of Finance have internal and inter-connected parts that must work in complement. A plan is the only thing that will tie together an unquantifiable real life and a complicated financial system. A plan raises the red flags. It tells you how your finances are missing or uncoordinated.
I believe that there is an upper limit for “do it yourself” financial planning. Financial planning is much more than goals and money. As a financial author, I will always be the first to say that the best real world answers are not found in books. A book won’t notice destructive portfolio holdings. Financial planning software is abundant and sometimes free, but software will never have a conversation with you about your fears. Software may tell you that you need legal planning, but it isn’t going to hold you accountable to re-titling the deed of your house so that your family doesn’t miss out on a huge step up in cost basis. We are accelerating our reliance on artificial intelligence, but for the time being, it takes a human to tell a human to suppress unhealthy biological instincts. In my experience, people who create their own financial plans look at them for a season and eventually never again.
There is always the math answer and the real world answer. Right now, I hope you are at an apex of financial motivation. You may recognize a lot of financial matters you need to address, perhaps even urgently. However, if you are like me, as you finish this, you probably already know which book you will read next. Before you move on, I want you to take a moment and consider where you are right now. Ask yourself, “What specific areas do I need to improve, develop, change, or explore?”
We’ve learned that a typical retirement lasts around 30 years. We’ve also learned that over the course of a 30-year retirement, prices typically rise 2–3 times. We all share the central fear that at one point we will desperately need money and not have it. In retirement, this comes down to the monolithic question, “Will your money outlive you, or will you outlive your money?” In my experience, most people don’t know the answer.
My mission is to help people not only answer this question, but to answer it with a wealth-optimized outcome.
My goal in writing this book was to paint a comprehensive picture that, as far as I could tell, has never been painted before. Selflessly, I wrote the book because I felt that it needed to exist. Selfishly, I wrote the book as a beacon to those who want to work with someone like me.
Please consider this your invitation. I don’t know what level of exposure this book will have, nor what level of attention this open invitation will get. I will say that it is my goal to serve anyone who wants help and accountability. At times, we’ve had to wait-list people while we created capacity, but my professional goal is to always provide a home for this style of comprehensive advice.
As I write this, the stock market has enjoyed a bizarrely long bull run. Secretly, I had hoped the market would experience a significant drop just in time for this book to come to print so that it could serve as a voice of calm and reason amidst the storm. Instead, I’m in the regrettable position of publishing a bullish book, possibly on the cusp of a long overdue bearish market—that, to be clear, is not a prognostication, just a statistical inevitability. I also write this in the context of a myriad of political scandals and what feels like a growing global ideological conflict. While I have a hobby of mocking the overuse of terms like “unprecedented” and “literally,” when you read the headlines it feels like we are literally living in unprecedented times. But, there is, as always, a strong echo of the past. While the turmoil of our nation feels new, it’s just a remake of movies we’ve all seen before. As I look at the present, just like anyone, it is easy to lose sight of humanity’s long-term optimistic narrative. It is easy to tell yourself that this time is different and that the future may not follow the past.
There’s no shame in feeling this way. Fear is part of living. Humans have gotten to where we are because of our attentiveness to our fears and present day discomforts. However, your most probable path to wealth is to utterly ignore the headlines of the present. You will never have any difficulty convincing yourself to not have faith in the future. Your greatest challenge will be to override your fears and behave as though the future is bright, regardless of how the present feels.
The core of my message is to withhold the comforts of today, both emotional and financial, to increase the probability of greater comforts tomorrow. Volatility, frugality, and scary headlines may never be comfortable, but enduring them is much more comfortable than running out of money in old age. When you subscribe to optimism, outsiders see naiveté. However, long-term optimism is what history teaches us. If wisdom is built on experience, the wisest choice is an applied faith in the future.