How To Unlock Your Financial Creativity

Exemplary financial advice springs from the least likely sources.

A case in point is music producer Rick Rubin.

His book, The Creative Act, discusses unlocking creativity and maximizing productivity by applying easy-to-follow practical steps.

Who would’ve thought the producer of artists ranging from Johnny Cash to the Beastie Boys may have a second career as a personal finance guru?

There’s one verb that doesn’t apply to Rubin – Boring.

The same cannot be said for most verbiage written concerning personal finance. Jargon like Fixed Income, Equities, Duration, and others are a snooze/confuse fest waiting to happen.

Source: S.E.C. 

Many of Rubins’s principles perfectly match managing money.

Simplicity is the key to brilliance. Rubin refers to himself as a reducer, not a producer. Ten tracks are better than thirty. Nothing is more hazardous to a financial plan than bringing in complicated and expensive investment products. As my colleague Barry Ritholtz likes to say, Come for the underperformance and stay for the high fees. Constructing a straightforward budget and savings plan may not win any Grammy Awards, but it will finance your retirement.

Collaboration is essential, and the best ideas come from unexpected places. Rubin launched many artists’ careers into the stratosphere. Working as a team and accepting constructive criticism are prerequisites. Too many investors overestimate their risk tolerance and behavior management skills. Finding the right financial planner, insurance, estate, and tax specialists accelerates wealth creation.

The biggest lesson I’ve learned in my career is to embrace failure and accept it as a part of the creative process. The music business is a microcosm of life. The only way to learn is through trial and error. Rubin is a supercharged audience member, not a musician. His failure to make it as a Rock Star turbocharged his producing career. Making mistakes is part of learning, but constantly repeating them is not. Losing money on cockamamie investments or delaying a savings program are ubiquitous investing errors. Doubling down or giving up gets you nowhere. Learning and regrouping is the right path.

The greatest rewards come from taking risks. Rejuvenating a fading star like Johnny Cash or discovering out-of-the-box artists like the Beastie Boys involved taking a chance and starting Def Jam Records in his N.Y.U. Dorm broke all the rules. Living a life of perceived safety is a dangerous fantasy. Everything involves risk regarding creating wealth. Either it’s transferred to someone else, like insurance companies, or delayed far into the future by stashing long-term retirement funds in cash for thirty years. The reason stocks outperform is they sometimes go down. Mistaking risk for volatility is a colossal error. The most significant risk is not keeping your long-term money in the stock market and watching your savings ravaged by inflation.

Zoom in and obsess. Zoom out and observe. We get to choose. Artists, like investors, need to focus on the big picture. Listening to the array of instrumentals, not the individual parts, helps to create the best music. Constantly fretting over daily stock market noise and taking your eyes off long-term goals is a recipe for disaster. Digging up an acorn to chart its progress stunts the growth of the Oak Tree. The same goes for excessively monitoring your portfolio and focusing on its components.

Rubin’s creative philosophy fits a goals-based financial plan. The best work is the work you are excited about. 

Borrowing from my friend Brian Portnoy, using your money to fund contentment is the ultimate motivational tool. Saving and investing become priorities when this concept is front and center.

Everything else will take care of itself.


Source: The Creative Act by Rick Rubin





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