I read a lot of books about investing and money. It's part of my job. My favorite part, actually.
Here's what I've found: There are a lot of smart financial people. And there are a lot of good writers. But there are very few of both.
Financial books tend to come in one of two flavors. They are either smart but unreadable to the average American – filled with jargon and formulas -- or they're easy to read but full of nonsense and bad advice.
A few years ago I stumbled across the rare writer who wrote with as much clarity as he did wisdom. He quickly became one of my favorite writers.
Carl Richards is a financial advisor and New York Times columnist. His trademark is illustrating complicated financial topics in the simplest way possible – with a Sharpie, on the back of napkin.
This sketch, for example, contains more wisdom and perspective than can be found in most investing books:
The genius of Carl's work is that he's stripped finance down to the few important topics that matter most. Since he focuses on big-picture topics, he never gets drawn into the weeds, getting trapped in the depth of nitty-gritty topics like what the market's going to do next month, or what Friday's jobs report means for your stocks. He writes about the terror of buying high and selling low. About the dangers of overcomplicating investing. About saving too little, or too much. About financial goals, and how to talk about money with your family.
These topics might seem simple and boring, but that's kind of the point. The financial media spends so much time talking about financial topics that are complicated but don't matter that the simple stuff that matters gets swept under the rug.
Carl spoke at a Motley Fool event last month. Here's a snippet of a great analogy between investing and soccer goalies, and the importance of inactivity in investing:
Carl has a new book out called The One-Page Financial Plan. It's a fantastic read devoted to understanding the big-picture of your financial wellbeing, getting things roughly right rather than precisely wrong. Focusing on detail and perfection, he writes, leads to all kinds of problems:
It doesn't surprise me that my most successful friends are confused when it comes to savings and retirement. When they do something, they want to do it right. They don't just want good advice, they want the best advice. They've often got a shelfful of books about investing or finance, but they simply don't have the time to really dive in—so, rather than do the "wrong thing," they do nothing.
Carl's first book, The Behavior Gap, totally changed how I think about personal finance. I think this book could do the same for you.
