Hard Work Won’t Do It: 5 Questions To Ask When Making A Financial Investment

Hard Work Won’t Do It: 5 Questions To Ask When Making A Financial Investment

Terminal illness sparks a flurry of thought and emotion—but it isn’t usually related to personal finance.

That’s why the case of Gordon Murray is so striking. Upon stopping treatment for his brain tumor nearly half a year ago, he channeled his thoughts and energies toward writing a book on personal finance with his friend (and financial adviser) Daniel Goldie. They called it “The Investment Answer,” and drew on Mr. Murray’s 25 years of experience on Wall Street to provide readers with his best insight.

Banker Shares Investment Advice

The New York Times, understandably fascinated by this extremely likeable banker and author (he didn’t include his picture on the book cover or mention his illness in its pages because “I’m sick of me”), spoke to him about his process and his best advice, and found out that Mr. Murray considered the financial knowledge he has gained while working with Mr. Goldie more valuable than his quarter-decade working with Goldman Sachs, Lehman Brothers, and Credit Suisse First Boston.

5 Decisions Every Investor Should Make

Here are the five decisions Mr. Murray recommends an investor make:

  1. Will you invest alone, or consult an adviser?
  2. How will you divide your money? A less volatile portfolio may earn more over time.
  3. How will you divide your money between foreign and domestic investments?
  4. Will you invest in actively or passively managed mutual funds?
  5. How will you rebalance your portfolio to improve returns?

The American Way Is Somewhat Flawed

Mr. Murray is quoted as saying that “It’s American to think that if you’re smart or work hard then you can beat the markets,” and we think he’s hit it right on the head. The American mindset is that hard work will bring success, and many small-scale investors view the market as something to be manipulated and overcome for that success. In fact, for those of us investing on an individual level, the market is more like a force of nature than a problem to be solved. That’s why we advise investment in passively-managed index funds, where your money can ebb and flow with the financial tide, as well as a diversified portfolio to temper the effects of any failing stocks. Hard work is always admirable, but hard work or intelligence without the right information will leave you on the sand.

Tell us in the comments: Have you ever read a great book on investing? Share it with us!

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