I can’t stop thinking about the Masters. It’s the best golf tournament in the world, and we had a great one a couple of weekends ago. If you’re not into golf, a guy named Rory McIlroy won the famous, springtime golf tournament this year.
With his victory, he completed the career Grand Slam, which means winning all four men’s major championships: the Masters, the U.S. Open, the PGA Championship, and the Open Championship. He became only the sixth person in history to achieve such a feat. And only the second player, behind Tiger Woods, to do it in the past 50 years.
What makes Rory’s story unique is that he became the youngest player to win a U.S. Open since 1923 at 21 years old, and then two of the other major championships within a 3-year span from 2011 to 2014. All he needed to complete the career Grand Slam was a win at the Masters. However, that task proved to be easier said than done.
Not only did Rory not win the Masters, but he didn’t win any more major championships over the past 11 years. He came so close on a myriad of occasions, but couldn’t quite get the job done. That is, until the decade-long drought came to an end a couple of Sundays ago.
I watch quite a bit of TV, movies, and sports, and let me tell you, the final round of this year’s Masters was as dramatic and engaging as any form of content I’ve consumed in recent memory. It was one of those days that reminds you why you watch sports.
After the Winning Putt | Rory McIlroy Captures His First Masters Win
Now, how does Rory McIlroy winning the Masters connect to personal finance?
It doesn’t.
Although for the people who watched, I hope it provided a needed distraction for a few hours from the scary economic headlines and stock market volatility.
I did want to revisit a topic I’ve written about plenty of times before, but it still bears repeating, especially in light of recent stock market and economic events.
Which is, knowing how you should act during stock market downturns is very different than actually doing those things as you’re living through an unprecedented trade war that feels like it will upend everything.
Let’s go back to golf for a second.
The funny thing about golf is it has such a hold on me, and many others, despite being a devilishly difficult and fickle game. During one round you can hit the ball beautifully and feel on top of the world, only to discover the very next week that in the intervening days, you’ve somehow forgotten how to swing a golf club.
“One reason golf is such an exasperating game is that a thing we learned is so easily forgotten, and we find ourselves struggling year after year with faults we had discovered and corrected time and again.” — Bobby Jones
There’s always something to improve upon, but golf can never be mastered. Perhaps that’s why I like it so much. As legendary golfer Arnold Palmer once said:
“Golf is deceptively simple and endlessly complicated; it satisfies the soul and frustrates the intellect. It is at the same time rewarding and maddening – and it is without a doubt the greatest game mankind has ever invented.”
In my conversations with friends who are a bit frustrated with their golf games and who are tinkering with their golf swings to try and achieve better results, I’ll always hear them say something along the lines of:
“I know what my swing should look like in my head and I know what I need to work on, but it’s so hard to actually do it.”
Isn’t that the truth?
This is true for many aspects of life, but especially accurate when it comes to financial success. Personal finance is not a hard science—it’s a soft skill where how you behave is so much more important than what you know.
Morgan Housel gives a great example of this in his book The Psychology of Money.
Ronald Read lived in rural Vermont and lived about as low-key a life as you can find. He worked as a gas station attendant for 25 years and as a janitor at JCPenney for 17 years. A friend recalled that his main hobby was chopping firewood.
It wasn’t until Read died in 2014 at the age of 92 that he made national headlines. In his will, the former janitor left $2 million to his stepkids and more than $6 million to his local hospital and library. In 2014, almost three million Americans died, and fewer than 4,000 had a net worth of over $8 million.
People were baffled. Where did Ronald Read get all of that money?
As it turned out, there was no secret. He simply saved and invested what little he could for decades, and his tiny savings compounded into more than $8 million. That’s it.
A few months before Ronald Read died, another man by the name of Richard Fuscone was in the news. Fuscone was everything that Read wasn’t. He was a Harvard-educated Merrill Lynch executive with an MBA and was included in a “40 under 40” list of successful businesspeople. He earned enough money to buy multiple homes, including an 18,000-square-foot home in Connecticut.
However, when the 2008 financial crisis hit, Fuscone was forced to file for bankruptcy due to high debt amounts and illiquid assets.
Richard Fuscone had considerably more education and experience with finances than Ronald Read did, yet Read amassed far more wealth in his lifetime.
“No one wakes up thinking, ‘I am going to make bad decisions today.’ Yet we all make them. What is particularly surprising is some of the biggest mistakes are made by people who are, by objective standards, very intelligent. Smart people make big, dumb, and consequential mistakes.” — Michael Mauboussin
In what other industry does someone with no college education, no formal financial training or experience, and no high-end connections outperform someone with the best education, the best training, and the best connections?
It’s impossible to think of Ronald Read performing a heart transplant better than a Harvard-trained surgeon or designing a skyscraper superior to a highly trained architect.
Yet, these stories happen all the time in personal finance, and it all comes back to the fact that behavior and temperament matter far more than technical smarts. And in my experience, I’ve even seen instances where higher intellect has gotten in the way of good decision-making surrounding money.
Despite all of the financial knowledge and information we now have at our fingertips, there is no evidence that it’s made us better at managing our own money.
Because just as with swinging a golf club, knowing how to swing and hitting consistently good golf shots are two very different skills.
Thanks for reading!
Jake Elm, CFP® is a financial advisor at Dentist Advisors. Jake a graduate of Utah Valley University’s nationally ranked Personal Financial Planning program. As a financial advisor at Dentist Advisors, he provides dentists with fiduciary guidance related to investments, debt, savings, taxes, and insurance. Learn more about Jake.</em