A discussion I had with the Physician on FIRE at a recent meeting prompted me to think about some of the mentors I've had in the financial world. These are people whose thinking and writing have really affected the way I manage my finances and business. The more I thought about this list of people, the more I realized I have written posts criticizing some aspect of their work at one point or another! So, no criticism today, just some appreciation and a list of lessons learned.
My Appreciation For These Financial Mentors
William Bernstein, MD
At my first Bogleheads conference in 2008, I confessed that I was more of a Bernsteinhead than a Boglehead, which was good, since Bill made that meeting and Jack only attended virtually from the hospital. While what Bogle built (i.e. Vanguard and the popularity of index funds) has had a profound influence on me, his actual writing didn't. I've read a handful of his books now and met him in person, but that was all relatively late in my financial education. I think I've read just about everything Bernstein has published, and I read it early on. The Four Pillars of Investing was life-changing. The physician connection was probably part of it, but mostly I could just relate to the method of writing and logic behind his arguments. I'm sure many of you feel the same way. I'm also grateful to Bill for the help he has so generously given to me personally over the years, including writing the foreword for my book!
Lessons learned:
- An understanding of market history is critical
- The financial services industry does not share your financial goals
- It's okay to be an asset class junkie
William T. Spitz
This may be the only guy on this list you've never heard of, but his book was the first one I'd ever read that talked about building a portfolio composed of a static asset allocation of low-cost index funds, rebalanced periodically. The book, entitled Get Rich Slowly, is essentially the method I advocate for the vast majority of doctors to become wealthy- Invest early and often into a simple, low-cost, diversified portfolio and after a couple of decades, you'll be rich. While there are plenty of books on the market now advocating this method, there were precious few in 1996 when the book was published. Even Bogle's famous “Common Sense on Mutual Funds” wasn't published until 1999. I didn't find the book until 2004, however, when it was sitting on a shelf in a used bookstore in Tucson, AZ with dozens of crappy books. I read those crappy ones so you don't have to, but after digging through that pile of manure, I found this gem. Thank you!
Lessons learned:
- Use a static asset allocation
- Use index funds
- Steadily and intelligently investing a portion of your income is an almost sure, even if slow, path to wealth.
Rick Ferri
Several of Rick's books along with his forum contributions also had a big influence on me and his thoughts on asset allocation had a heavy influence on my portfolio. All About Asset Allocation is a classic. It's a better book than Spitz's, but it was published 12 years later. I once asked Rick why he kept repeating the same thing over and over again (use index funds, use index funds, use index funds.) He said this:
The truth about index investing must be told over and over again because lies are constantly being told around it. Many of those telling lies are financial advisors whose income depends on their client's use of high-cost active management strategies. They view simple, low-cost passive strategies through index funds as bad for their business.
Bogle might have started the first retail index fund, but at least in the last 20 years, I can't think of anyone who has done more to get that information into the hands of the masses than Rick Ferri. Thanks, Rick!
Lessons learned:
- The benefits of REITs in a portfolio
- The benefits of taking some risk on the bond side of the portfolio
- The merits of a total stock market approach
Larry Swedroe
Like many Bogleheads, I was bummed to see Larry retire from posting on the Bogleheads board a few months ago. His writing has had a big influence on the portfolios of many. Thanks, Larry!
Lessons learned:
- The merits of taking risk on the equity side (combined with a very safe fixed income portfolio)
- Factor investing. I know of no bigger proponent to the masses of DFA-style investing.
Mr. Money Mustache
Pete started his blog just a month before I started mine, although I didn't spend any time on it until later. He has been dramatically more successful than I have. Part of that is that he is fishing in a bigger pond (there aren't that many high-income professionals), part of it is his writing talent, but most of it is the somewhat revolutionary nature of his message in the personal finance blogosphere. The message is timeless (see the Stoics and Thoreau for instance) but the application to modern life is refreshing. Like him or hate him, he'll challenge your thinking. I agree with the vast majority of his philosophy, although I'm not sure that came across as well as I had hoped in this column I wrote about him a couple of years ago. No criticism today though. Thank you, Pete!
Lessons learned:
- You can live quite happily on dramatically less than the average American household earns
- Saving a huge percentage of your income for just a few years can lead to rapid financial independence
- A bicycle is a money-printing fountain of youth
- How you spend your time and money affects not just your personal finances, but also your health and the health of the world
- Hyper-specialization might maximize economic productivity, but it comes at a cost- the loss of self-sufficiency
Wade Pfau
Here's another one whose work has drawn a few polite criticisms from me in the past. Wade is soft-spoken but has had a dramatic effect on the ways people plan to spend their money in retirement. Thank you, Wade!
Lessons learned:
- Sequence of returns risk is one of the major risks in your financial life
- Everyone needs a plan to deal with sequence of returns risk
- There is really no such thing as a “Safe” withdrawal rate
- Guaranteed income in retirement has value, even if it means a lower expected future value of the portfolio
- Uses of SPIAs and longevity insurance in retirement
- Uses of a reverse mortgage in retirement
- Uses of cash value life insurance in retirement (if you happen to have been suckered into buying it years ago!)
David Phelps, DDS
This one may come as a surprise to a lot of people, given my recent post criticizing an email David sent out a while back. I've never met David and never listened to him speak in person. My interactions with him consist of just a few emails, reading some of his marketing emails, and watching some very short videos. Yet he has still had a influence on me. Thanks David!
Lessons learned:
- If you can't wait to get rich slowly, entrepreneurship, hard work, and leverage may be the answer. Yes, there is additional risk there. But you only get one life.
- Learn from those who have been there and done that
- Leveraged real estate can produce great wealth, very quickly
- Unchain yourself from “the chair” (think dentist) by maximizing your practice's earnings and developing alternate sources of income
Physician on FIRE
Yes, he might claim he has learned more from me than I have learned from him, but this young, financially independent anesthesiologist is a marketing genius. He knows more bloggers personally than anyone I know. I told him when he first started out that successful blogging is 10% great content and 90% marketing that great content. If I was half as good at marketing as he is, this website would have twice the traffic. Thanks, PoF!
Lessons learned:
- How to successfully use Twitter to grow readership and foster partnerships
- A physician income + a Midwest cost of living + very reasonable financial habits = very early financial independence
- Growing a blog is mostly about making friends
Mike Piper
When I was considering starting a blog, I asked Mike (aka The Oblivious Investor) for some advice. It has made a huge difference. His ability to invest simply and write concisely is phenomenal. He is also a whiz of a CPA and a successful author.
Lessons learned:
- Your portfolio can be VERY simple and still be successful
- You can use more than one 401(k)
- Writing and self-publishing a book is not that hard
- Bookselling can be a major revenue source for a blogger
Harry Sit
Harry blogged anonymously as The Finance Buff for a long time, and was one of the few successful finance bloggers I knew before starting to blog. I owe him a debt of gratitude for some very useful tips and encouragement he provided when I first started out. More importantly, his ability to think critically through complex tax and investing subjects has helped tens of thousands. Thanks, Harry!
Lessons learned:
- Blogging on the side can be successfully combined with full-time work
- A Roth 401(k) isn't a good idea for the majority of investors
- How to do your 8606 (Backdoor Roth IRA) right on Turbotax
John T. Reed
You know what the biggest issue is with real estate investing books? All the hype and “ra ra ra” motivational stuff. Take all that away, stuff it with the facts you need to know and the cautions about what can go wrong, and you're left with John's books. He also provides a much-needed counterpoint to the Kiyosaki philosophy. Thanks, John!
Lessons learned:
- If you're going to invest in real estate, you better get serious about it
- The reason real estate investors can do well are the same reasons they can do very poorly- expertise required and leverage
- There is a lot more to your return on a property than the buying and selling price
Dave Ramsey
Here's another one I've mildly criticized in the past, but Dave has helped literally millions of people get a better handle on their finances. Listening to callers on the show is sometimes like watching a traffic wreck in slow motion- you just can't take your eyes away, but there is a lot of great stuff there. Thanks, Dave!
Lessons learned:
- Most people are way too comfortable with debt
- It doesn't take much income to live when you don't have any payments
- The majority of people will benefit most from a simple, easy to follow plan
- Most of the time behavior matters more than math
- If you do what everyone else does, you'll get what everyone else has
- The more convenient it is to spend, the more you will spend
Thomas J. Anderson
I reviewed (and criticized) Thomas's book, The Value of Debt in Retirement. It functions as the best counterpoint I know to Ramsey's “there is no good debt” philosophy. He advocates a careful, cautious use of debt to boost your bottom line. Thanks, Thomas!
Lessons learned:
- Don't be extreme about debt elimination
- Leverage risk may be lower than your other risks
- The concept of an “optimal debt ratio”
- You can borrow tax-free against your taxable investing account just like your house or life insurance
I'm sure there are many that I have forgotten, and I have certainly learned things from many of my readers who are quick to gently and patiently correct my errors. Thank you all for the influence you have had on my financial life!
What do you think? Who are the big influences on your financial life? Was it their message or the timing of it? Comment below!
I have read most of your inspirational authors. Bernstein, Ferri, and Swedroe all have multiple books that I have read. Bernstein emailed me once about a comment I made on the blog about the dot.com bubble and I was very honored and I look forward to meeting him at the conference. After I started reading MMM even though I was well above FI I decided to decrease some of my consumerism (“luxury branded” items). Pfau I sometimes read but it is tough because he is so negative. I follow Mike Piper and Harry Sit’s blogs. I love the comments Harry Sit makes about financial articles he finds to link to. Dave Ramsey I just encounter someone links to him. Physician on Fire I read because he is the spreadsheet master. He also links to some great blogs like ERN. We all know that POF is funny. The others you list I have not heard of. I would add Michael Kitces to the list of great blogs. I just skip the articles about running a financial planning practice. I also like the books written by Phil Demuth and Demuth plus Ben Stein. Of course the most influential book ever written that applies to people who read this blog is The Millionaire Next Door. In case you don’t know he wrote several others and they all are good. Sorry this post is long but I have been reading about this topic for years.
burton malkiel and john bogle-thank them for making us smart investors
Good list, WCI… good list.
FYI, I think it’s good you include Dave Ramsey here. He’s right about at least a couple of really big important things…
Excellent post!
Your parents probably taught you the #1 and absolutely essential key to financial success: spend less than you make.
WCI at the Academy Awards! 🙂
Excellent Post. Just sent it to my kids. I’ve read most of the books you referenced. The consistent advice is to live on less than you earn, Save, Invest in low cost funds, (index or ETF), maximize Roth accounts and matching 401k plans, Repeat. Everyone should read the millionaire next door.
I highly recommend Ben Carlson who writes A Wealth of Common Sense blog. His best is analyzing current frustrations ( low volatility, sideways markets ) in historical perspective.
This gives me some new material to read…and who is this PoF guy I keep hearing about…just kidding, he is truly a marketing genius.
A Kiyosaki counterpoint is well needed as is getting rid of some of the cheerleading in both the real estate and investing world. There is nothing wrong with some motivation, but there better be some depth behind it.
Thanks for compiling this list! Have a great weekend.
I agree with most of your picks, but especially Dr. Bernstein. Regarding Pfau’s recommendation for a plan to handle sequence risk, I like the program in Bernstein’s “Ages of the Investor”.
I would add James Lange, The Roth Revolution. He lays out a good, but complicated, program to get the most value out of Roth conversion taxes. Those in early retirement and with already taxed assets (such as WCI readers) would be well positioned to run Lange’s program. I am in year two and am pleased with results so far.
yes I forgot Lange too.
I first read Bernstein as an intern in 2005, and he changed my life. I would say the biggest philosophical point I took away from Four Pillars was that the point of saving for retirement is not to get rich, it’s to not die poor.
Excellent summary. Sometimes it is scary how similar my post on the topic would have been. Now I don’t need to write it though.
I have corresponded with some of those listed and they were all helpful. Bernstein emailed me with some thoughtful advice. I met Larry in person and it was reassuring to know he is a great guy as well as a great adviser and author. He was giving free copies of his books out. He didn’t give me any though because he said based on all my comments and questions I either already read them or I didn’t need to – which I took as an awesome compliment.
Two other authors who have written thought-provoking books and who have gone out of their way to help me personally with super advice when I really needed it: Gillette Edmunds and N.N. Taleb
Gratitude is such a contagious sentiment. It feels good and spreads quickly. I know you’re not fishing for a compliment, but thanks to you too! We all stand on the shoulders of those that come before, and to aknowlwge it once in awhile shows class.
Oops *acknowledge*
Love the part about Ferri I cut and pasted below. I cannot tell you how many times I have told my clients this:
The truth about index investing must be told over and over again because lies are constantly being told around it. Many of those telling lies are financial advisors whose income depends on their client’s use of high-cost active management strategies. They view simple, low-cost passive strategies through index funds as bad for their business.
I am honored and frankly quite surprised to be included. I’ve received much more mentoring than I’ve given, but I sure appreciate being mentioned among the many more accomplished individuals.
Have a great weekend!
-PoF
For me, Paul Merriman has been one of my top financial mentors. Much of his advice overlaps with that of Bogle’s, but he’s more open to strategies like ‘mechanical’, trend-following market timing (i.e. non-emotional, not based on intuition) as a risk management tactic. He advocates buy-and-hold for most and believes that most people cannot consistently follow a mechanical market timing strategy, and he may be correct, but I’m not sure that most people out there can stick with a pure buy-and-hold approach either when stocks comprise 70% or more of their portfolio and stocks drop by 50%.
Todd Tresidder has been another mentor of mine. While they make no mention of each other, his advice largely mirrors that of Merriman. Tresidder recommends real estate and entrepreneurship as investment strategies in addition to what he calls ‘paper’ assets like equities and bonds.
“Stocks for the Long Run” by Siegel has been a good mentor for me. What I learned is that stocks are safer than anything over 17 years, in terms of preserving your purchasing power—even bonds! Or, at least on average and speaking in terms of probability. Jim, you are a marketing genius too. You use every principle from cognitive psychology out there, intuitively. Whether it is the post from your 12 year old, the scarcity principle with regards to your conference, the reciprocity principle, or from Dan Ariely the concept that people go crazy for the word “free.” My all time favorite is the “babysit my kids” comment. Admit it, come clean, you did that on purpose, right? Brilliant. Let me throw out a great book suggestion, “Influence,” by Cialdini.
Thank you WCI for the role you’ve played in my own learning. My father sent me a copy of your book during my PGY2 year. I devoured it on CCU long calls. Not only did you get me started saving for retirement as a resident, you opened my eyes to the world of financial education. Thank you for mentoring so many of us.
Great post. Second MMM, Ferri, Bernstein, Sit, Piper, Swedroe, and add one Boglehead, Taylor Larimore. For me John Bogle sits at the top of the mountain.
I would add Dirk Cotton’s “The Retirement Café” to the list. Excellent logic, written so even a reluctant investor is enlightened and amused.
> there were precious few in 1996 when the book [Get Rich Slowly] was published. Even Bogle’s famous “Common Sense on Mutual Funds” wasn’t published until 1999.
True, but “Bogle On Mutual Funds: New Perspectives for the Intelligent Investor” was published in 1993. That’s when I learned the truth.
That’s when I graduated from high school. Bogle wasn’t quite on my radar yet!
Great list! Bill Bernstein was my first mentor and recommend him constantly. Another one I like that you haven’t mentioned is Darrow Kirkpatrick, an early-retiree blogger that lives at caniretireyet.com.
Agree with much of WCI’s list.
Allan Roth’s (daretobedull.com) How a Second Grader Beats Wall Street introduced me to Bogleheads.org and that eventually lead to WCI. Jim Otar’s Unveiling The Retirement Myth introduced sequence of return risk and made me get religion re: retirement. Came across Otar via Jonathan Ping at MyMoneyBlog.com who I’ve really enjoyed for many years now.
A good round up. I have been following Larry Swedroe, i must recommend you reading his book ‘ think act and invest like warren buffett’. The book will definitely help you achieving tour financial and life goals
Thanks for the book tip. I’ve got a different Swedroe book next to the computer right now that I’ll be reviewing at the end of the month.