What are the timeless principles we can follow in order to become better investors?
In this podcast episode you’ll learn:
- How a book’s permanence makes it different from a podcast.
- How David’s book got written and published and why his publisher just recalled the hardcover version of the book.
- What are the 10 questions we should answer before we invest in anything.
Successful investing is a lifelong pursuit that baffles many. How do you accomplish it? How do you know where to invest your money? The questions are endless, but David works to answer them in his new book, Money For the Rest of Us: 10 Questions to Master Successful Investing. David sought to create a modern guide to investing that encompasses his strategies from years of working in the industry. This episode covers his writing process and a detailed outline of what is covered in his book. Don’t miss it!
The art of writing a book
The right book at the right time can change your life. David read many such books as a teenager. He articulated that he spends a lot of time and energy into crafting his podcast, but believes there is something special about the permanence of a book. It’s carving. It’s crafting. It’s timeless. It’s one sentence at a time, meticulously crafted to convey meaning.
David acknowledges the plethora of great investing books available, but none of them teach all of the methods and principles for investing that he’s found successful. He wanted to write something that covered a specific strategy, without being pinholed to a specific niche. David’s desire was to create a timeless book—whether a publisher would pick it up or be self-published.
What does the process of writing a book entail?
David knew the approach he wanted to take and the questions he wanted to answer in his book. If you’ve never had the experience of writing a book, the process is extensive—but David greatly enjoyed it. He wrote a proposal in 2018. It was a strategic plan—a framework—that included a chapter outline, sample chapters, as well as a marketing plan, the target audience, and how the book would be promoted.
The project was sold to McGraw-Hill, and from January 2018 to January 2019 David wrote the book. After a year of meticulously crafting exactly what he wanted to say, he had 21 volunteers review his manuscript. After receiving feedback and making changes, he turned in his book to the publisher.
From there he engaged in back-and-forth with editors doing line-by-line copy edits. They worked on cover design and writing a glossary. But the extensive process culminated in a published book that belongs to the readers—those interested in finally mastering successful investing.
How to Master Successful Investing
David structures his book to answer 10 questions—a checklist of things that one can ask before investing, to compare one investment opportunity to another.
Question 1: What is it? A person needs to seek to understand and explain in simple terms an investment’s characteristics. If you are unable to understand and explain an investment to someone, don’t invest in it.
Question 2: Is it investing, speculating, or gambling? Take time to classify where the opportunity falls and if the outcome is uncertain. If you can categorize it you can then decide whether to invest in something that only has a positive expected return.
Question 3: What is the upside? Focus on three drivers: cash flow, the cash flow growth, and what investors are paying for cash flows.
Question 4: What is the downside? What is the maximum potential loss and the personal financial harm caused by that loss? It’s all about defining risk and managing it.
Question 5: Who is on the other side of the trade? Understand the dynamics of the market.
Other criteria to consider when choosing an investment
David continues his synopsis of his book and covers some of the final questions that must be asked:=
Question 6: What is the investment vehicle? This chapter takes a deep dive into the structure of investments, particularly ETFs, closed-end funds, and mutual funds. Do you know how to understand the vehicle that houses an investment strategy?
Question 7: What does it take to be successful? There are specific attributes that you use to help determine performance. Successful portfolios have a diversified mix of dependable return drivers that we have identified beforehand.
Question 8: Who is getting a cut? Different entities take a portion of your return in fees, taxes, and expenses. Do you know where and to whom that money is going?
Question 9: How does it impact your portfolio? You want a diversified portfolio that gives you creative freedom that aligns with your knowledge, interests, and values.
All of the questions you must process and ask yourself come down to this pivotal final question: Should you invest? How much should you invest? When do you invest? David’s book seeks to answer all of these questions in a way that is true to his beliefs about investing—and true to the last 5 years of answering questions on this podcast.
To hear more specifics about his process and details about his book that was just released, listen to the whole episode now!
- [0:20] How David decided to write a book.
- [3:00] The right book can change your life.
- [4:20] The art of writing a book.
- [7:00] The extensive process of writing a book.
- [9:57] Recording the audiobook.
- [11:32] Question 1: What is it?
- [13:36] Question 2: Is it investing, speculating, or gambling?
- [14:32] Question 3: What is the upside?
- [15:54] Question 4: What is the downside?
- [16:42] Question 5: Who is on the other side of the trade?
- [18:06] Question 6: What is the investment vehicle?
- [18:58] Question 7: What does it take to be successful?
- [20:20] Question 8: Who is getting a cut?
- [21:03] Question 9: How does it impact your portfolio?
- [22:05] Question 10: Should you invest?
- [23:06] What happened to the book launch
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