The LA Kings holiday pack is back the perfect gift for the hockey fan in your life a three-game pack starts at just $159 and includes a holiday blanket buy today and you'll receive an additional game for free Don't miss out visit lakings.com holiday today Hey radicals, we begin today's show with a short essay There's a fundamental difference between the things you do every day Every single day and the things you do only when the spirit moves you One difference is that once you've committed to doing something daily you find the spirit moves you daily Rather than having a daily debate about today's agenda You can decide once that you will do something and then decide every single day how to do it That is an essay on but written by seth godin called daily Published on his site at on december 21 2014 Seth is well known for being a daily blogger somebody who posts a new article each and every single day And i've been thinking a lot about the concept of daily and I have noticed that what seth says in this essay is Seems to be very true The things that you do each and every day the habits that you have each and every day are the ones that stick with you This is very true when it comes to brushing your teeth flossing your teeth Hugging your husband or your wife, whatever the situation is the things that you do each and every day are going to be powerful So how can this be applied to money?

Today I want to share with you just some simple ideas That are a bit counter-cultural I'm going to talk against some of the advice that we often get I don't have a perfect solution to this advice but it is a countercurrent Theory that I think will be helpful to you and we're going to kick off the discussion here with reading another essay by Mark ford mark ford is he's also known under the pen name of michael masterson He wrote for years and founded a website called early to rise and I'm going to read to you an essay that he wrote called how to get richer every day I read this essay, I think probably six seven eight years ago He he doesn't have a time stamp on the essay and it's published all over the web So I can't cite the exact time but i've read this essay many years ago and it always stuck with me So here I read Mark's essay called how to get richer every day Of the hundreds of wealth building strategies i've tried over the years.

The best one was also the simplest Make sure you get a little bit richer every day This thought occurred to me more than 30 years ago I'd recently decided to become rich and that decision had me reading and thinking about wealth building day and night I had daily fantasies of getting rich in all sorts of fancy ways, but deep down inside.

I knew complicated strategies were not for me When it came to making money, I was extremely risk averse in the race to a multi-million dollar retirement. I was a tortoise not a hare At the time I had a net worth of zero and an annual salary of thirty five thousand dollars With three small children and my wife in college our expenses were gobbling up every nickel of my after-tax income So my first wealth building goal was small I would get richer by just ten dollars per day I knew I would eventually raise the ante but I wondered How much money would I acquire in say 40 years by just putting an extra ten dollars aside every day in a bank account?

earning five percent per year I did the numbers and was happy with the answer almost half a million dollars My total capital invested would be one hundred forty nine thousand six hundred and fifty dollars the simple interest would total one hundred and fifty six thousand nine hundred and fifty dollars and the compounded interest would amount to one hundred and eighty two thousand sixty one dollars for a total of four hundred eighty eight thousand six hundred and sixty one dollars Then I wondered what would happen if I put away fifteen dollars per day That came to seven hundred nineteen thousand six hundred and four dollars And then I asked what would my retirement fund grow to at eight percent that came to just over six one point six two million You can imagine my excitement and so I made this my number one wealth building commandment Get a little bit richer every day But I soon realized that I couldn't follow this rule consistently If I invested my money in stocks the market fluctuated too much I'd be worth one hundred and ten thousand dollars one day and one hundred and eight thousand dollars the next My friends and colleagues who knew more about investing than I did told me not to worry about these short-term fluctuations They said if I kept my focus on the long term i'd get the nine percent or ten percent the market delivers over a long period Of time, but even though I understood the principle.

I didn't want to settle for that I resolved the problem. I put the bulk of my retirement savings into municipal bonds high yielding bank cds and Unleveraged rental real estate properties this drastically reduced my portfolio's volatility But it also in theory at least Reduced my expected ultimate return on investment I compensated for that lower roi By taking on more work and devoting a portion of that extra income to my retirement savings That ensured I was always ahead of my schedule, even if the roi I was getting on bonds cds or real estate dropped This simple tortoise paced program worked Since I made this resolution in the early 1980s.

I have never experienced a single day of being poorer than I was the day before Think about that And there's more submitting yourself to this commandment will change the way you think and feel about building wealth It will help you appreciate the miracle of compound interest. It will make you less accepting of risk It will make it easier to understand the benefits and drawbacks of every type of investing And it will turn you into an income addict Which in my book is an essential component of thinking rich If you want to use this strategy for retiring rich begin as I did with a goal of ten dollars per day Once that becomes easier, you'll find that you want to raise the ante You could hike it to fifteen dollars per day as I did my first year But soon thereafter your addiction to income will make it possible for you to raise your target much higher than that These days my target is ten thousand dollars per day And I do it without worry I've explained this strategy to many people over the years and I don't think a single one ever took it seriously Perhaps it didn't seem clever enough for them or perhaps they felt they were already doing well by following the investment schemes They were using at the time But none of them ever acquired the wealth I did They sometimes had great individual hits they'd tell me about or even streaks of winners when the markets were favorable But as time passed Mr.

Market always had his way with them In the race for wealth, I've always been a tortoise But by following this simple rule of getting richer every day I was able to do better than I ever expected without a single day of feeling poorer than I was the day before Now again that essay is written by Mark Ford and it's called how to get richer every day I hope the concept of the essay grips you because I think it's a particularly valuable concept Unfortunately, I don't think that the essay delivers on its title I think the title is a well-chosen title that is provocative and intriguing But the essay doesn't actually answer the question of how the essay simply says you should do this and For years i've had this essay in the back of my mind or the simple concept i've long appreciated Mark Ford's writing I stumbled across him when I was in college when he was penning the early to rise blog Which or excuse me?

It was primarily centered around a newsletter not a blog the early to rise daily email newsletter And I enjoyed his writing. I found him to be down to earth and extremely Relevant to me and so for years I followed early to rise And I found a lot of their concepts very very useful at one point.

I considered Getting a job with them and working with them. I was interested in pursuing a job as a copywriter And their offices were based in delray beach, florida And which is near where I live in west palm beach, florida So i've long admired him and i've often admired his writings on wealth and this particular Concept is always stuck in my craw In a good way And so today I just want to talk about it a little bit I want to lead off with simply saying that I don't know how To do this.

I don't know how to actually get richer every day Mark's concept here is that By focusing on the requirement of getting richer every day you will pursue things that are more conservative Because your goal is to make sure you don't lose money and I want to focus on Some and we'll discuss that further in a moment But when it actually comes how to guarantee this I don't see any way that it's possible to guarantee It's more of a mindset an ideal that Is useful as a target but never actually attainable fully Although if I could I still think about how could it be done?

The reason I say it's never fully Attainable is if you use his examples Municipal bonds, you know cds are not going to go down in nominal value. They could go down in real value meaning Their actual stated dollar figure is not going to go down They're guaranteed but they could go down in inflation adjusted terms but municipal bonds can go down in value even though they are more conservative than a portfolio of stocks they still can go down in value if interest rates rise the bond values can fall and if you are not yet at a point in your wealth building career where you're saving as much money per day as your bonds have gone down in value then You could in theory lose money same thing with real estate Even though here he talked about non-leveraged real estate the value of a real estate portfolio can fall Now my guess would be that if I were talking to mark about this concept and I were raising those objections he would say You should be paying attention to that.

He would say If your goal is to get richer every day, then you should be paying attention And recognizing that you might need to adjust your portfolio I think he would say that because I know that Back in 2007 2008 when south florida real estate was heavily hit I don't believe that he was fully invested in the local south florida real estate market at that time And perhaps this theory that he has that I have to get richer every day was a theory that influenced his decisions When the risk Rose in real estate.

He focused on getting out So I don't know how to teach you how to get richer every day I do know that my appreciation of this concept Has dramatically changed? In the last five to ten years in my own thinking I grew up reading the basic nuts and bolts of mainstream personal finance and one of the core pieces of advice that is given in mainstream personal finance is When you are younger you can afford to take more investment risk This is usually advice that's given in the context of selecting a portfolio of stocks The idea is that if you're younger you can afford to be more aggressive with your portfolio Because you have more time to wait out any drops in the value of the market In the stock market if you want to get a higher total potential return You have to be willing to sit through periods of higher volatility, which means greater risk of short-term loss So traditionally those who are young are advised and if you're not advising this there's no way that you're going to keep an investment license So this is 100 mandated group think Those who are younger are advised to have portfolios that are weighted more to the risky side A higher percentage of stocks Versus bonds and here by risk i'm referring to volatility.

So let me switch to using volatility rather than risk The idea is that younger investors can manage a portfolio with more volatility more ups and downs I get that And to some degree I think it's true It's especially true if you could in some way guarantee or at least heavily influence an investor to stay invested through the down times after all A loss is only a real loss If you realize the loss You can have a loss that's on paper a nominal loss The value of the assets has gone down when measured to market value But you don't actually recognize the loss or realize the loss until you sell the investments So younger people by not needing the money sooner Should be able to sit tight through market downturns and thus not realize the losses and they have more time for the portfolio to rebound So I think that investment strategy is sound I can't it makes sense in a way And again every single licensed financial advisor, which I used to be I am no longer But every single licensed financial advisor is going to be required to make recommendations on that basis for for clients The younger you are the more aggressive you can be I stand by that recommendation I have no problem with young people owning a portfolio of 100% stocks I have more questions about Somebody recommending a portfolio 100% stocks to somebody who's 90 years old But the problem that I have is this When is it more devastating for you to lose money When you're poorer Or when you're richer And when I overlay that question To what mark ford talks about in his essay I have a hard time being as confident in the financial advice that I used to give to young people to go all in stocks I've increasingly come to appreciate The safety or having safe money and i've increasingly come to appreciate having Accessible money, especially for young people I Want you to consider this question and i'm going to use extreme examples to demonstrate the point If You are very poor And you have a hundred dollars in savings And you lose 50 of your savings Your hundred dollars of savings drops to fifty dollars in savings Think about the impact that will have on your life If you were in that situation Now compare that to somebody who has one million dollars of savings And they lose 50 of their savings dropping them to five hundred thousand dollars of savings And think about the impact of that on their life Certainly neither of these people is going to be happy But If you had a hundred dollars in savings and you lost half of it That might mean that your cell phone bill doesn't get paid Or that you and your children don't eat today There is a huge potential disruption in your day today If you lose fifty dollars of your hundred dollars of savings But if you have a million dollars of savings and it goes down in value to five hundred thousand dollars You're most likely going to eat And you're most likely going to be able to pay your cell phone bill It's much more devastating for you to lose money when you are Poorer than when you are richer At least in terms of impact on your lifestyle.

I don't know whether it's more devastating psychologically To watch half a million dollars disappear versus watching fifty dollars disappear I don't I have not researched that question to see if it's been studied in an academic format But it's much more devastating with potential impact to your life I think that we who are Thinking about money and we who are giving financial advice Should really consider how to apply this concept of getting richer every day as a way to hedge against this risk First I think it's a useful way of considering.

I think it's a useful way of thinking What can I do today? To get a little bit richer. What can I do today to set a little bit more aside? What can I do today? To make sure that my investments grow in value I think by not accepting I think that often i've been too cavalier about accepting the potential for loss And as i'm getting older still being a young person but thinking more about money i'm much less accepting of the potential for loss I want a little greater margin of safety And as I consider all of the clients that i've worked with and all the situations that i've interacted with I think we underestimate the impact of loss, especially in the early years It's pretty devastating for young people to lose substantial amounts of money Yes, they have more time They can keep working and do it and earn it back again But it's pretty devastating And when I think about a scenario like mark ford Discussed in his essay here I find an elegant simplicity in this type of advice Start by making sure that you get ten dollars richer every single day and then move your goals up This type of focus puts your attention in the right space For example, if your goal is to get ten dollars richer every day that's going to start with your saving ten dollars every day Then if you're doing like he described and you You refuse to go To have your wealth drop on any day.

You're going to naturally purchase appreciating assets rather than depreciating assets Rather than depreciating assets if you're tracking your net worth on a daily basis, you're naturally going to avoid Purchasing the car that will depreciate quickly Or purchasing the consumer item that will depreciate quickly and you're naturally going to move in a positive direction You're going to recognize that I need to set this aside so that the interest grows This simple concept could help many young people Avoid many of the consumerist mistakes Get richer every single day that means in the early years you can't buy the expensive stuff You can't buy the expensive stuff until your wealth is paying for it the increases of your wealth are paying for it I think this also puts the focus in the right direction of focusing on safety first safe investments first And the reason I think this is so powerful is that safe investments will give the person more confidence I've observed that when I've owned stocks, I often have not had a lot of confidence in the dollars printed on that page Because of the volatility now intellectually I've trained myself to be a good investor so that intellectually I can handle it and I can discipline myself But i've noticed emotionally a different effect when I own things that are safer And i've noticed how much freer my decision making has been when i've had more of my wealth into things that are safer Given the choice between this appreciation of safety And the academic intellectual acknowledgement of higher potential returns if I would just discipline myself I'm finding a higher level of happiness with safety A higher level of enjoyment of life with safety That doesn't mean i'm not willing to take a risk I hope that's coming through loud and clear that doesn't mean i'm disagreeing with the fact that younger investors Can afford to have a portfolio that's allocated more aggressively What I am taking issue with Is the idea that that advice the advice for young people to invest aggressively in stocks Actually works most effectively I'm not convinced it does anymore and i'm not convinced it does because I don't think it keeps people's focus in the right area Mark ford's strategy here is behavioral and that's my third point about it It's behavioral In order to actually follow through and get richer every day you have to track your money You have to save diligently you have to research and think about investments You have to think about risk very very carefully and make sure that you understand it.

You have to calculate risk That's how I could see stock investing fitting into this strategy now mark is not a huge fan of Of mainstream stock advice, but I have no problem fitting that into this this simply means that You calculate the standard deviation of your portfolio that gives you or you use the number that is the calculated standard deviation of your portfolio That gives you what the the volatility might be and then you take that number and you fit that number into your planning On on your portfolio so that you make sure that as he said if i'm getting ten thousand dollars richer every day Then make sure that on any average day.

It's less likely that my portfolio is going to go down by more than ten thousand dollars That'll make a big difference over time I don't have anything more to add on the the on this topic than that So i'm going to wrap up the show with just a couple of quick things that you can do to pay attention on a daily basis very practical things Because if you want to get richer every day, it may start for some of you by thinking about it conceptually But for most of us it starts with actions And the things that we do daily are usually the things that are going to make the biggest impact in our lives Notice this in the food that I eat I've noticed that people who exercise consistently generally tend to be those who do it just about every day with rare exceptions Notice this in a number of a number of places So here are just a few simple things that you can do To focus on a daily basis so that you can continue to get richer every day Bring focus and attention to your money Write down every single financial transaction on a three by five card and consider figuring out How much your expenses cost you on a daily basis?

If you wanted to get richer every day, you would have to actually know how much was coming in every day And actually know how much was being spent every day One suggestion i've made in past episodes of the show and I have found very useful is to change the scale Of the financial transaction in order to make it more relevant If you take a and you're just simply looking at say the difference between renting a two thousand dollar a month apartment and a three thousand dollar a month apartment it doesn't sound like that big of a difference because both of those are in the ranges of of appropriate rents That that people that people are make are will pay But if you break two thousand dollars down into 30 days and recognize that you're going to be spending 66 dollars per day And the question is do you want to spend 66 dollars per day?

Or a hundred dollars per day on your rent? All of a sudden that number can be more emotionally strategic So write down each transaction and then figure out how to look at it on a daily basis If you're going to get richer every day, you need to know how much you're spending every day and how much you're saving every day A couple other little tips make sure that you're saving money every single day If it's possible that mark ford's concept is only useful in the early stages of wealth It's possible that it's not as useful down the road I don't know since I don't know him.

I haven't asked him this I don't know how much of this is written for rhetorical flourish versus something that he actually does every day I don't know Most things that are useful when we're just learning them simply become habits and then those habits guide us to the right place But in the early years, I think this could be so valuable If you want to save money every day a great place to start is with a piggy bank or modern jar version of that And put a ten dollar bill in there every day Or set up a daily transfer from your checking account to your savings account every day Make sure that you're prioritizing setting aside money every day Or I have also found this to be very powerful in my own life if you're paying down debt Make sure that you owe less money at the end of every day than when you started I love I mean, I think the word that some people would put on this would be the concept of little snowflake payments, right?

Coming up against the the concept of a debt snowball snowflakes Basically just put little chunks And keep a focus on it every day I've recently tried to really home in and resurrect some of my skills that have gotten rusty So i'm writing out my goals every day. I'm writing out my list of projects every day.

I am Putting those on I put those on a three by five card I have a couple three by five cards slide it in my pocket rewrite them in the morning That daily focus on those projects and goals and top priorities Helps me to focus my energy on the things that matter And doing it every day Is very helpful So if you're trying to pay down debt Make sure that on your three by five card you write down.

My goal is to be debt-free by the date of And here's how much I owe then make sure that every day you can put a little check mark towards that I'm focusing on my personal health Really seeking to make progress on that So each and every day, what is the thing that i'm doing today?

To make sure that i'm moving That i'm increasing my health. What am I doing today to contribute to this goal? Take these little micro efforts apply them in your life Then let me know how they work The la king's holiday pack is back the perfect gift for the hockey fan in your life a three-game pack starts at just $159 and includes a holiday blanket buy today and you'll receive an additional game for free Don't miss out visit la kings.com slash holiday today