About half way through writing Chapter 4 (You Aren’t What You Drive) in The Millionaire Next Door, I listed one of our cars “for sale” in the local paper. This timing was just a coincidence. However, the characters who showed up to look at the car were worth a chapter by themselves!
Let’s look at Steve, a member of the Balance Sheet Affluent . He was a vice president and head of the motor vehicle leasing department for a large regional financial institution. He majored in finance and accounting. After Steve had volunteered this information, I couldn’t help but ask: Why would someone in the vehicle leasing business be interested in buying a used car? I’ll paraphrase his response: I don’t lease; I’ve never leased. I only buy used vehicles- high quality, made in Japan by Toyota and/or Honda. Following this Steve explained that he often does the math on buying versus leasing, used cars versus new cars. For Steve it was a no brainer. He purchases used cars from individual owners. Isn’t it interesting that he did not purchase cars coming off of a lease?
In my national study of more than 900 millionaires (those with investments in excess of $1M), 89% acquired their most recent motor vehicle via a purchase, not a lease.
Another case that is noteworthy was published by Daniel P. Wiener in the Independent Advisor Newsletter, “Do As I Say, Not As I Do.” Mr. Wiener’s research, albeit on only one family of mutual funds/equity funds, focused on the proportion of mutual fund managers who don’t own shares in the mutual funds they manage. It may be more than you think! Of course, this does not mean that such funds are poor performers. With all else being equal, however, I prefer that the fund I select have managers who are sharing my risk.
I am always amazed when I find people who don’t eat their own cooking!
2 thoughts on “At Best A Contradiction”
This is so true….. One of the first questions I ask any professional service provider or merchant of a major purchase product is what they use/buy/invest in personally. This is really the only true test of their belief system. If they don’t believe in the product enough to use it, why should I? Similarly, when I represent a product or service, i always include a statement of my own belief by sharing my own investment in the product or service (or at a bare minimum my desire to own if it is beyond my means)..
Thank you once again for this Lesson Learned
Consider spreading the risk. I’ve already invested myself in my job by going to work there everyday. If I then put the money I make into the same business (e.g., buy stock) then I’m concentrating my finances in a narrow area – hence a higher risk. It might sound logical, but I don’t think it is automatically financially reasonable to do so.