The Geometry of Wealth

A fantastic story about the father of modern portfolio theory, Harry Markowitz, brings this to life. Markowitz considered the optimal mix of assets for his personal portfolio but found it all too complicated to wrap his prodigious brain around. “I should have computed the historical co-variances of the asset classes and drawn an efficient frontier,

73% of Americans say money is the most stressful factor in life. It is more stressful than death, politics, or religion.

Like our own attempts at planning for the future, this was hardly an exercise in precision: The chance of a deity was 50-50 and the consequences were either “infinite” or “small.” But by simple back-of-the-envelope reasoning, Pascal’s decision was obvious: Pay a small cost to avoid a potential catastrophe. And if the small cost led to large gains,

According to Timothy Wilson in Redirect, those who fare better in life “have better coping strategies in the face of adversity—they confront problems rather than avoid them, plan better for the future, focus on what they can control and change, and persist when they encounter obstacles instead of giving up.”44 Those who take the prepared mind serio

Channeling Gertrude Stein, money can buy happiness if you shop in the right places, both physically and mentally. When money is spent to underwrite the sources of contentment detailed in the previous chapter, then—yes—money buys happiness. “Money is an opportunity for happiness, but it is an opportunity that people routinely squander because the th

Hopefully the matching protocol sounds reasonable, but it’s important to recall that very few actually do this. It also stands in opposition to the favorite pastime for too many investors and financial advisors: beating the market. That’s a silly and fruitless game. It’s not tied to our real needs, it’s attached to our ego.

Our triangles present three main inversions, three ways to think differently. I’d encourage you take close note of each: First, we prioritize being “less wrong” over being “more right.” Managing risk is a priority over enhancing returns. This risk-first mindset flies in the face of most elements of the modern money culture. It also happens to be th

All modern investors serious about their long-term outcomes should consider the various forms of available pre-commitment strategies. Significant evidence shows that investors who avail themselves of auto-investment strategies in their workplace retirement programs tend to save more and do better over time.168 The routine is particularly useful dur

People who have more money are not necessarily happier—though some are. If anything, money alleviates sadness more than it inspires joy. In day-to-day living, beyond a modest income, more money doesn’t help. But research reveals that those who live with purpose and embrace the adaptive self tend to be more content. In that case, money—when spent wi