Over the past several years, Scott Galloway–a serial entrepreneur and NYU business school professor–has moved into the public spotlight. Through two podcasts (the popular Pivot podcast with Kara Swisher and his own Prof G pod), Galloway analyzes business trends and offers financial advice, all in a highly idiosyncratic, entertaining way. There’s a lot of schtick, but also a lot of substance.
Next month, Galloway will release his latest book, The Algebra of Wealth: A Simple Formula for Financial Security, which promises to lay bare the rules of financial success in today’s economy. With the video above, also called The Algebra of Wealth, the professor distills his advice, drawn from personal experience, which he often shares with his students. His key points include:
- Focus: In your career, focus on areas where you excel. Play to your strengths. Also work in areas poised for growth. That is, choose expanding industries, not contracting ones. And consider moving to cities where opportunities abound. It’s also key to develop strong personal relationships, particularly with your partner.
- Stoicism: Drawing on Stoic philosophy, Galloway recommends focusing on the parts of life you control. That includes focusing on spending, and living below your means. Your financial future ultimately depends more on your savings than your earnings. Beyond that, spend your time in a disciplined way. Be productive. Learn. Invest in yourself. Don’t waste your life on TikTok. And when it comes to investing, don’t gamble and speculate. Take the more patient and prudent approach and invest in diversified index funds that compound over time.
- Time: Don’t waste time, especially when it comes to investing. “Invest early, and make it a habit,” Galloway says. “The math on compound interest doesn’t lie. Starting early with a little can beat starting later with a lot.” It’s “time in the market,” not “timing the market,” that counts. The graph embedded in his video makes his point.
- Diversification: You gain protection through diversification. It protects you from making fatal financial decisions. If you spread out your risk, you will be better positioned to recover if certain investments don’t go your way. You don’t want to learn this lesson the hard way.
Summing up, Galloway poses the question, How do we get rich? The answer: Slowly. It takes time, discipline, making good decisions every day, and controlling your impulses. Look for his book, The Algebra of Wealth, which complements his earlier book: The Algebra of Happiness: Notes on the Pursuit of Success, Love, and Meaning.
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