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How I invest

This is a New Year I think we’re all excited to start. While it’s a good time to review your investments to see if any changes are warranted, a book published toward the end of last year made me think it’s also important to consider more than just what investments you own.

The new book, titled “How I Invest My Money” by Joshua Brown and Brian Portnoy, is a collection of essays by professional investors and advisors. It’s an interesting book but they forgot to ask me to contribute so I figured I would share some insights from the past couple of decades of my investment experience.

Eat your own cooking

Hopefully, it doesn’t come as a surprise that I invest my money very similarly to how we invest our clients’ money. I’m a big proponent of “eating your own cooking.”

I try to automate investing as much as possible. The less time I spend fidgeting with mutual funds, the more time I have for other priorities.

Separate savings into “buckets”

I have three broad categories of savings goals or buckets split among cash reserves, college savings and retirement savings. For cash reserves (which I use for my “rainy day” fund and short-term goals), I use a mixture of online savings accounts and U.S. Series I Savings Bonds (many of which I bought years ago and pay quite a bit more interest than CDs today).

For my two kids’ college savings, I’m a big proponent of the Wisconsin Edvest 529 College Savings Plan. I get a modest tax deduction upfront with tax-free growth. Ongoing contributions are automated for convenience so I’m less likely to forget or spend the money on something else.

Retirement savings are spread across tax-free Roth IRAs, Traditional IRAs and 401(k) plans. I use some of the same mutual funds from Schwab, Vanguard and Dimensional Fund Advisors (DFA) we use for clients with a tilt towards value stocks and smaller companies. Focusing on well-diversified, low-cost choices provides the best opportunity for growth without me trying to guess the direction of the stock market or pick individual stocks (read Charles Ellis’ classic book, “Winning the Loser’s Game” if you need convincing).

I’d be remiss if I didn’t acknowledge my largest investment which is the business I co-own.

It can be difficult to quantify the value of a small business but without a doubt, the most important asset is the people who work with me for which I’m incredibly grateful. Some of you reading this may also realize your greatest assets are not in your retirement accounts but rather in your own skills or expertise, family relationships or social connections. These are all important assets too, but that’s a topic for another day.

Hopefully sharing a bit of insight into how I invest will prompt you to consider the purpose and method for investing your own money. As we launch 2021, let’s be thankful for being here and take inventory of all our assets (financial and otherwise).

As seen in the Racine Journal Times January 10, 2021

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