This CIO Only Owns One Mutual Fund with Peter Lazaroff, Ep # 114

We make financial choices harder than they need to be. That’s why Peter Lazaroff wrote the book, Making Money Simple. He joins me today to discuss the theme of his book. We reflect on why we make money decisions so complicated when the beauty of finance lies in simplicity. You’ll be interested to hear why Peter only owns one mutual fund and what advice he has for you to help your kids (and grandkids) become financially savvy. You’ll definitely want to listen until the end to learn how you can get a copy of Peter’s book for free.

We make #FinancialChoices harder than they need to be. That’s why @PeterLazaroff wrote the book, #MakingMoneySimple. He joins #RetirementStartsToday to discuss the theme of his book. Click To Tweet

Outline of This Episode

[1:58] Why do we make money so complicated?
[4:22] Why does Peter only own one mutual fund?
[6:34] Learn why Peter needs his own advisor
[10:22] Sometimes you need to draw a line in the sand
[13:25] How can you get a solid foundation in saving?
[20:55] Find out how you can get one of Peter’s books for free!

Why do we make financial choices so complicated?

There are so many different savings and investment options that it makes our finances seem complex. It’s hard for people to even know where to start. We often assume that a complex solution is needed to handle our finances appropriately. But the more you learn about saving, investing, taxes, and estate planning the more you understand the beauty of finance lies in simplicity. The simple choices are usually the best solution. That’s why Peter wrote his book, he wanted to help people focus on the things that matter the most to them and to help them narrow their decisions.

@PeterLazaroff and I reflect on why we make #money decisions so complicated when the beauty of #finance lies in simplicity on this episode of #RetirementStartsToday. Click To Tweet

Why does Peter only have one mutual fund?

Do we think that simplicity is just too easy? We are taught that achieving the best requires a lot of work. We work hard all our lives to get far. So we naturally assume that the intelligent choice is one that we don’t understand. There are incredibly complex things about finance but that doesn’t mean you have to utilize them.

Peter knows that you don’t need 15-20 funds to build a diversified portfolio. He manages $4 billion at his firm but in his own portfolio, he only has one mutual fund. That fund meets all of his objectives. It is globally diversified, it matches his asset allocation goals, it aligns with his risk tolerance, and he doesn’t have to think about it. He says that the more we have to think about the more mistakes we can make. Peter has minimized the risk of mistakes from of his financial equation by having only one mutual fund.

There’s only one thing in finance that you can control

Someone who knows so much about finance shouldn’t need a financial advisor, right? Aren’t financial advisors supposed to help people who don’t know what they’re doing? Peter realized early on that he, too, needs an advisor. He needs a financial advisor to hold him accountable for his actions.

Financial advisors are human too. They make poor decisions just like the rest of the world. Peter realized that he can make financial mistakes and that by having a financial advisor he would be more likely to stick to his decisions. He knows that controlling his own behavior is the only thing he can control when it comes to finance. How are you at controlling your financial behavior?

You’ll definitely want to listen until the end of this episode of #RetirementAnswerMan to learn how you can get a copy of @PeterLazaroff’s book #MakingMoneySimple for free. Click To Tweet

How can you get a solid foundation in finance?

Any conversation with kids about finance can seem forced. But you can teach good saving habits early on. Nowadays with everything automated, saving is easier than ever. Start saving early, no matter what the amount. When saving over the long term tiny changes can become huge and a good savings rate will cover many mistakes made along the way. The most important thing to teach about finance is the power of compounding. Listen in to learn another great idea on how to get kids into learning about money.