During his college years, a close friend of mine travelled to the US and worked as a valet at a prestigious hotel in Los Angeles. One of the regular guests was a technology executive, a true genius who had designed and patented a key element in Wi-Fi routers while still in his twenties. He had started and sold multiple successful companies and was known for his extravagant wealth. However, my friend noticed that he also had a problematic relationship with money, displaying both insecurity and childish recklessness.
According to my friend, the executive would often carry around a stack of $100 bills several inches thick, showing it off to anyone who showed even the slightest interest. He would boast loudly about his wealth, often while under the influence of alcohol and without any provocation.
One day, he handed my friend several thousand dollars in cash and asked him to go buy a few $1,000 gold coins from a nearby jewellery store. Later on, the executive and his friends gathered by a dock overlooking the Pacific Ocean and proceeded to skip the coins like rocks on water, laughing and arguing about whose coin went further.
But this extravagant behaviour could not last forever. As my friend later found out, the executive eventually went broke.
This is an example that shows how success with money has less to do with intelligence and more to do with behaviour, which can be difficult to teach even to highly intelligent individuals. A genius who lacks control over their impulses can easily become financially unstable. On the other hand, ordinary people with no formal education on finances can become wealthy if they possess certain behavioural skills.
The Wikipedia article I enjoy the most starts with “Ronald James Reid was a philanthropist, investor, janitor, and gas station employee.” Ronald Reid grew up in rural Vermont as the first high school graduate in his family. This is an even more impressive feat considering he had to hitchhike to school every day. But for those who knew him, there wasn’t much else to say about Ronald Reid. He lived a modest and unassuming life. For 25 years, he worked as a mechanic at a gas station and then spent another 17 years cleaning at J.C. Penney. At the age of 38, he bought a small two-bedroom house for only $12,000 and lived there until his passing. After losing his wife at the age of 50, Reid never remarried. A friend once mentioned that chopping firewood was his main hobby.
When Ronald Reid passed away in 2014 at the ripe age of 92, his story made headlines around the world. Out of over 2.8 million Americans who passed away that year, less than 4,000 had amassed a net worth of over $8 million – and Ronald Reid was one of them. In his will, he left $2 million to his stepchildren and over $6 million to his local hospital and library. This came as a surprise to those who knew him well. Where did all this money come from? As it turns out, there was no secret – no lottery win or inheritance. Reid simply saved whatever small amount he could and invested it wisely over decades until it grew into over $8 million. From humble janitor to generous philanthropist – that was the remarkable story of Ronald Reid’s life.
A few months before Ronald Reid’s passing, another man named Richard made headlines as well. Richard Fuscone was everything that Ronald Reid was not. A Harvard-educated Merrill Lynch executive with an MBA, Fuscone had such a successful career in finance that he retired in his 40s to focus on philanthropy. Former Merrill CEO David Komansky praised Fuscone’s business acumen, leadership abilities, sound judgement, and personal integrity. He was even featured in a prominent business magazine’s ’40 under 40′ list of successful individuals. But then, like the tech executive who skipped out on paying for his gold coin, everything came crashing down in the mid-2000s. Fuscone borrowed heavily to expand his 18,000 square foot home in Greenwich, Connecticut – complete with 11 bathrooms, two elevators, two pools, and seven garages – which cost over $90,000 per month to maintain. Then the 2008 financial crisis hit. The crisis affected everyone’s finances, but it completely devastated Fuscone’s. His high debts and assets that were hard to liquidate left him bankrupt. “I currently have no income,” he allegedly told a bankruptcy judge in 2008. First, his Palm Beach house was foreclosed upon in 2014. Then it was his Greenwich mansion’s turn. Five months before Ronald Read donated his fortune to charity, Richard Fuscone’s opulent home – where guests could dine and dance on top of a see-through covering over the indoor swimming pool – was sold at a foreclosure auction for 75% less than what the insurance company valued it at.
Ronald Read exemplified patience while Richard Fuscone embodied greed. That one trait made all the difference and overshadowed their massive differences in education and experience levels. The lesson here is not simply to be more like Ronald and less like Richard, although that isn’t bad advice either.
There are two universal topics that impact every single person, regardless of their interests. These are health and money. The healthcare industry has made remarkable advancements in modern science, leading to longer lifespans globally. However, the same cannot be said for the financial industry, where even the most educated individuals struggle to navigate successfully. Despite finance being a highly sought-after major at prestigious universities like Princeton University’s School of Engineering, there is no evidence to suggest that it has honed investors. Examples like Ronald Reid, who achieved financial success with no formal training or connections, coexisting alongside Richard Fuscone, who ended up bankrupt despite his elite education, show that luck plays a significant role in financial outcomes. This also highlights the fact that financial success is not just about technical knowledge but also about behaviour and discipline. These soft skills, often dismissed as unimportant in finance, play a crucial role in achieving financial goals. In this series, I aim to use short stories to demonstrate the significance of these soft skills in making sound financial decisions that benefit everyone. Money is an omnipresent force that affects and confuses us all in different ways. It teaches us lessons on various aspects of life such as risk-taking, confidence, and happiness. And amidst all this confusion and complexity lies one of the most fascinating aspects of money: its psychological impact. While traditional education focuses on teaching finance through formulas and rules, understanding and managing money requires a deeper understanding of emotions and nuances. Money is truly one of the greatest shows on earth, revealing human behaviour in its rawest form.
After experiencing the financial crisis firsthand, I quickly realised that no one could fully explain what caused it or how to fix it. For every theory, there was an equally convincing rebuttal. Unlike physics, where laws guide outcomes, finance is heavily influenced by human behaviour and can be interpreted differently by different people. As I delved deeper into the crisis, I came to understand that psychology and history were better lenses for understanding it than traditional finance principles. To comprehend why people fall into debt, one must study their underlying behaviours of greed, insecurity, and optimism. The same goes for investors who sell out during a market downturn; it’s not just about the math of future returns, but also the emotional toll and fear of not being able to provide for their families.
Voltaire’s quote that “History never repeats itself; Man always does” rings true when it comes to money. Most books don’t need 300 pages to convey their message, which may explain why many American authors seem to repeat themselves over and over and over again, each time with slightly different phrasing. This is because publishing contracts for non-fiction books require a certain word count, regardless of the depth or simplicity of the topic being discussed. I’ve been asked to write a few business books, and each contract was for a certain word count. I stopped writing when I’d covered the topic, despite being under the contracted word count. The publishers published the books, anyway. So, now you know.