Just Keep Buying: Proven Ways to Save Money and Build Your Wealth by Nick Maggiulli

1. Where Should You Start?
Why saving is for the poor and investing is
for the rich
W
hen i was
23 years old I thought I knew the answer to building wealth. Keep your fees
low. Diversify. Hold for the long term. I had heard this kind of advice many
times from investing legends such as Warren Buffett, William Bernstein, and
the late Jack Bogle. While this advice wasn’t incorrect, it made me focus on
all the wrong things financially as a recent college graduate.
Despite having only $1,000 in my retirement account at the time, I spent
hundreds of hours analyzing my investment decisions over the next year. I
had Excel spreadsheets filled with net worth projections and expected
returns. I checked my account balances daily. I questioned my asset
allocation to the point of neurosis.
Should I have 15% of my money in bonds? Or 20%? Why not 10%?

I was all over the place. They say that obsession is a young man’s game. I
learned this truth all too well.
But despite my intense fixation on my investments, I spent no time
analyzing my income or spending. I would regularly go out to dinner with
coworkers, buy rounds and rounds of drinks, and then Uber home. Spending
$100 in a night was easy in San Francisco, where I lived at the time.
Think about how foolish this behavior was. With only $1,000 of investable
assets to my name, even a 10% annual return would have only earned me
$100 in a year. Yet, I was regularly blowing that same $100 every time I
went out with friends! Dinner + drinks + transportation and my year’s
investment returns (in a good year) were gone.
Forgoing just one night of partying in San Francisco would’ve made me the
same amount of money as one year of investment growth at the time. Can
you see why my financial priorities were so messed up? All the Buffett,
Bogle, and Bernstein in the world wouldn’t have made a difference.
Compare this to someone with $10 million in investable assets. If they were
to see just a 10% decline in their portfolio, they would lose $1 million. Do
you think they could save $1 million in a year? Highly unlikely. Unless they
have a very high income, their annual savings just can’t compete with the
regular fluctuations in their investment portfolio. This is why someone with
$10 million has to spend a lot more time thinking about their investment
choices compared to someone with only $1,000.
These examples illustrate that what you should focus on depends on your
financial situation. If you don’t have much money invested, then you should

Just Keep Buying: Proven Ways to Save Money and Build Your Wealth by Nick Maggiulli