I’m going to start this article with a couple of housekeeping notes. I hope all the father’s had a great day yesterday.
I know I did. My wife and kids took me to Gillette Stadium (home of the New England Patriots) where I could walk on the field and tour the locker room. It was great to walk on the field and think, “This is where the magic happens!” The biggest draw was the locker room tour. On Tom Brady’s locker there was a motivational “poem.” It said (paraphrased):
1. There are people who “+”
2. There are people who “-”
3. There are people who “X”
4. There are people who “÷”
Surround yourself with 1s and 3s. Ignore the 2s and 4s.
Unfortunately, cameras weren’t allowed in the locker room, so I couldn’t get a picture to give you the exact wording. I tried to find the source and closest I came was this Tweet by Jalen Rose:
People will come into your life for Four reasons…to Add, Subtract, Multiply or Divide…choose wisely! #HappyNewYear15
— Jalen Rose (@JalenRose) January 1, 2015
The connection makes sense as they both went to University of Michigan with Rose leaving the school as Brady was entering it.
(If anyone can sleuth out the whole thing and post it in the comments, I’d love them forever.)
I have one more quick housekeeping note before we get on to the article. I hope to be writing a lot more in the coming weeks. Camp has started which translates to 2.5 hours more of kids’ care in the evening than I get during the school year. That’s a lot of potential productivity.
Buy the Investment, Not the Product
I was reading Joe from Retire By 40s article about thinking before you buy your first home. The main premise was that the house that you live in is a liability. The bigger the house the more the mortgage is going to be. That’s money that you aren’t going to be able invest. You also need to fill it with stuff. Utilities are also going to be higher for bigger houses in general.
That’s why I always say, “Don’t Buy Too Much House.”
However, Joe notes that real estate can be a great investment. After all that’s how Arnold Schwarzenegger made his first million dollars.
I came away thinking, “Buy just enough house to live in and invest the rest of money into an asset that someone else paying you for.”
iPod Nano, A Love Story
Allow me to illustrate the “Skip the Product, Buy the Investment” with the story of an iPod Nano. To borrow from Dickens, it is the best of examples and the worst of examples.
The iPod Nano came out in September of 2005. For $250, you carry a whopping 4GB of music in an extremely compact space. It was amazing!
You could have bought a share of Apple stock for $6.60 on September 2. While the stock went up a bit on the news, that month you could have bought around 38 shares of Apple stock instead of the iPod Nano (I’m rounding up a tiny fraction of a share, but let’s just attribute it to sales tax.) Today, 38 shares of Apple stock is worth $5548.
You could have made over $5000 if you were able to “think different.”
This is an extreme example, so let me balance it with a counter example. I bought the iPod Nano when it came out. A woman I was dating really wanted an iPod, but she grew up in a family without money. She’d been out of school for only a few years, but had a mortgage (with PMI) and some student loans. It didn’t really make sense for her to buy a Nano.
For Christmas, I surprised her with the iPod Nano and she was speechless. I luckily scored a better investment than buying Apple stock.
Today that woman is my wife. We’ll celebrate our 10 year anniversary next month.