Today, I want to share three lessons my father taught me about life, money, and freedom.
My dad had a difficult childhood. He spent much of it in Holland during World War II.
From the ages of 8 to 12, he moved from orphanage to orphanage and family to family. Often hidden in the dead of night with the help of the Dutch resistance.
The Nazis had taken his parents to concentration camps. And he lived in constant fear that something might happen to him.
To occupy his mind, he learned the game of chess.
He spent hours alone in tight quarters practicing moves. It helped him divert his attention from a future he couldn’t control.
But chess also involved thinking ahead. (A few years before he died, he published a book about his life called One Step Ahead.)
Dad told me that chess allowed him to stay sane and alive during the war. It made the anxiety of wartime more manageable.
When I was five, he taught me how to play. More than that, through chess, he taught me my first valuable wealth-building lesson.
Lesson 1 – Focus on the end goal and the steps along the way.
Chess is similar to building wealth over time.
It unfolds piece by piece. Sometimes you gain a piece, sometimes you lose one. And you can’t always control how your opponent will move.
But the key to success is to focus on the end goal as well as the steps along the way.
For long-term wealth creation, the goal is financial security. The steps are the many investment choices we make.
Whether you’re buying artificial intelligence stocks, commodities, or Bitcoin, building wealth takes time.
Each step you take helps you get there. But if you’re not careful, bad decisions can set you back, too.
So don’t invest all your money in one sector, company, or commodity. And don’t invest it all at one time.
Because the markets will throw you curve balls. You will take losses on some investments and gains on others.
But if you stay committed to the long game and manage your risk, you will emerge a winner.
Lesson 2 – Live within your means to achieve financial freedom.
My dad never wasted money. He never bought anything he couldn’t afford. And the only money he ever borrowed was as a mortgage.
When I was a little girl, he’d take me with him to shop for groceries at the local Stop & Shop in Poughkeepsie, New York.
We’d traverse the aisles and he would ask me how much I thought different things cost.
How much is that gallon of milk?
How much is that bunch of grapes?
How much is that box of cereal?
In the beginning, I’d guess random numbers. But then I started noticing how prices changed.
In 1973, I saw the cost of a gallon of milk rising. It wasn’t rising by pennies anymore. It was rising by several cents each time we went to the store.
Dad told me it had to do with President Nixon. As a five-year-old, this was my first foray into the political economy!
Many years later, I wrote about that period of high inflation in my book, All the Presidents’ Bankers.
Nixon’s price controls, among other world events, led to unintended consequences.
Out-of-control inflation was one of them. Inflation more than doubled to 8.8% in 1973. By 1980, it was at 14%.
At the bequest of Wall Street, Nixon abandoned the gold standard in 1971. Since then, the dollar has lost as much as 98% of its value.
The lesson my dad taught me from those grocery outings was to live within your means. That’s because prices can change suddenly.
You need a cushion to navigate those tougher times without having to borrow. So, like my dad, my only debts were mortgages.
My dad also used those principles of patience and living within your means to guide his investing.
His approach was to make slow, steady investments to accumulate wealth. He tended to invest in high-quality bonds, gold, and silver coins.
And you can also grow your nest egg with this in mind.
Lesson 3 – Never stop learning in your own way.
Dad worked at IBM’s headquarters. He was a math genius. At IBM, he created what would evolve into today’s AI.
Back then, Dad taught me to question everything. That philosophy shaped me in life as much as in investing.
There are a lot of facts out there. There’s a lot of misinformation, too.
So, it’s on each of us to decipher what truths to follow. It’s how we form our own opinions and grow our knowledge.
For instance, my dad was the first person in his family to get a Ph.D. He did that while he was working full-time at IBM and raising three kids.
I was the second person in our family to get a Ph.D. It took me a lot longer than him, though.
I started a Ph.D. before I took a job at Bear Stearns. At Bear, I became a senior managing director. I built and ran my own analytics group in London.
I then became a managing director at Goldman Sachs, where I ran two teams.
I’d completed all the coursework for a Ph.D. in statistics at NYU.
But I didn’t finish it. I chose to travel the world instead. First as an investment banker, then as a journalist and author.
For years, I worked and researched global trends in Japan, China, Brazil, and so many other countries.
This gave me more insight into geopolitics and economics than a Ph.D. in statistics would have.
Nomi meets with Brazil’s Paulo Batista, a former Executive Director at the IMF, in Shanghai
But I didn’t give up on getting that doctorate.
A few weeks before he died, my dad asked me if I was going to complete my “second” Ph.D.
I told him I would. And so, I did.
Two decades after I set aside that first Ph.D. in statistics, I completed my doctorate. Except this time, it was in international political economy.
My educational path wasn’t conventional. But I have no regrets.
So, this holiday season, I urge you to take a moment. Think about something you want to learn or understand better. And set aside the time to do just that.
If you’re like me, you won’t regret it.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins