#18 Creating Wealth: Life Advice from Financial Experts
Updated: Jun 21, 2021
Creating Wealth is an in-depth conversation between Bill Taber, an experienced financial advisor, and his millennial daughter about personal finance, investing, and financial planning.
Bill Taber is President of TABER Asset Management, a Registered Investment Advisor (RIA) and fiduciary firm located in Des Moines, Iowa since 1998. For decades, Bill has provided investment management services to clients, creating wealth, building wealth, growing income, and preserving capital for each and every client. TABER offers personalized asset management, wealth management, retirement planning, financial planning, and services such as 401(k) rollovers.
His daughter, Anastasia, lives and works near Washington D.C. She enjoys discussing finances and her cats’ latest antics with her dad.
Episode 18: Life Advice from Financial Experts - Bill and Anastasia answer a listener's question about credit reports before diving into a free-form discussion based on financial and lifestyle tips from famous experts known for their financial prowess. Bill talks about his career and finally achieving a role he loved. They discuss how hard work early in a career can open up opportunities later in life. Anastasia connects the Great British Bake-Off to the power of positive mindset. And of course, Yoda.
For questions and comments, you can email us at firstname.lastname@example.org.
Anastasia: Welcome to Creating Wealth, I’m Anastasia.
Bill: Hi, I’m Bill.
Disclaimer: The views expressed today are our own, solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular investment strategy. The views are subject to change and are not intended as a forecast or guarantee of future results.
Anastasia: So today is a bit of a fun episode. We're going to start by answering a listener's question about credit reports, and then we're going to transition into the main part of our episode. We hope you guys will enjoy it. So, what is a FICO score?
Bill: Well, FICO is an acronym for Fair Isaac Corporation. It's a publicly owned company that collects information on people that borrow money, and seeks to develop a score or put a number on that person's credit worthiness. In other words, how risky is it for a creditor to loan money to that person? And how likely are they to pay it back on time? Scores range from 300 to 850. The higher the score, the more likely a creditor checking into your history will want to loan you money.
Anastasia: That seems pretty straightforward. What is the difference between the three annual credit reports, which are Equifax, Experian, and TransUnion?
Bill: If there are differences, they're not as important as the similarities. All three companies provide a history of any money that you have borrowed, from which entity you borrowed it from, and in what amount. It's a history of your repayments, whether they were on time, or late, or skipped. Whether the accounts were closed in a satisfactory manner or if they're still open or active. And the accounts will drop off from the report after 10 years. So if there are differences, they're very minor. The similarities are much more important, because those are the key elements that help create that FICO score.
Anastasia: How do you read credit reports?
Bill: Well, once a year, you're allowed to go online, and you basically look at the information and it's pretty much self explanatory. It's not so complicated that you can't see what's there and what's important. One of the important things to do is if there is some information that is on there that you know to be incorrect, such as an account that you know you don't have, or payments that you know you made on time that are showing is late that you contact those companies and dispute that. You want to do that at least once a year, because otherwise, information that gets reported by those companies to FICO becomes part of the permanent record, and could adversely affect your ability to get additional loans in the future.
Anastasia: Yeah, I saw that what experts recommend is to do a check of your credit reports once a year so that you can spot those inaccuracies and correct them. What are the things you should keep in mind when understanding your credit score?
Bill: Probably to know that FICO considers the biggest part of your score to be your payment history. In other words, have you made payments on time, or have they been late, or have you skipped them. The second most important thing is the amount of money that you owe. And the third--and this is a distant third--is the actual length of your credit history. And I can give you an example here. I opened a credit card. I think we talked about this in the past when I was in college, and I have kept that credit card ever since. And so part of the reason why I think my credit score is as high as it is, is that I have at least one account on there that's been open for eons (laughs) I won't say how many decades, but it's been a long time. But that's a distant third, the key parts of the score are your payment history and how much you owe.
Anastasia: That was one thing I was thinking of when getting married and starting to merge your financial accounts--which, every married couple does that differently, especially in today's age--but we decided to put each other on each other's accounts. And I kind of had this realization that I don't really need my credit card anymore, but I also don't want to close it because I know how important it is to have a long running credit line.
Bill: Yeah, I think it's a good thing to have. So long as you're not having to pay, for example, a $50 annual fee to keep an account open that you're not using.
Anastasia: Yeah, that would be a reason for cancellation if they charged you for it. It's crazy to me, because credit scores really just reflect your ability to handle debt. So if you never have debt, then you're not going to have a good FICO score. But if you are good at paying off your debt, then you'll have a great FICO score.
Bill: I think some of the creditors that go on there will ask perhaps in the application process what your gross income is. And then by going to that site, they'll be able to see how many loans you have and how much you're actually making in payments to various entities each month. And if those total up to a percentage higher than what they'd like them, they'll say no, we won't loan you money.
Bill: But it's just like the bank. I mean, they love it when you take out money for a long period of time, and you pay it off very gradually.
Anastasia: And then they make lots of money off of you.
Anastasia: (Laughs) So it's really just a score of how good you are at paying them money (laughs) giving them money.
Bill: Credit is a large part of the US economy. I mean, when you think about the amount of cash that's out there, versus the amount of credit that's out there, the economy would not really work very well without credit.
Anastasia: Yeah, no credit--not to bash on credit or anything, it's wonderful. I mean, it's why our economy is huge, why people have so many opportunities, is the existence of credit. But there's both sides to the story. So do you want to transition to the main portion of our episode?
Anastasia: Today, we thought it would be fun if we took some quotes from some famous financially minded people, and just kind of talked about what it brought to mind for us. So the first quote is from Warren Buffett. He once said, "The investor of today does not profit from yesterday's growth." So what does that mean to you?
Bill: To me it means that investment is not about the past, it's all about the future, it's about picking a company that has a solid position in an industry that is very early in the trend that's allowing it to grow its earnings and profits. It's kind of like the baseball analogy--it gets back to how a baseball game lasts for nine innings. And what you want to do is pick a company that's in the early innings--say, maybe second, third, fourth inning--because then they have a long trend for growth. And if you pick the company properly, and the management does well in executing on their business, then you'll make a lot of money on it. I'll give you an example. Back in the 1990s, well in the 1980s, Microsoft came out with a software system that became kind of the standard, and then there were computer companies--IBM was early in the game--but then Dell stepped in and became a bigger entity. And once there were a certain number of these computers out there, then there was the need for those computers to communicate with each other, which is referred to as networking of computers. And there was one company that was kind of head and shoulders above everybody else, it was called Cisco Systems. And that company grew from a couple hundred million in annual sales to tens of billions of dollars in sales. Stock went up 10x, 15x in value. But it reached a point, like people do--and this is important to understand for perspective--is that companies have lifespans like people. Adolescence--where it's growing rapidly or maturing, which tends to occur in adulthood.
Anastasia: "Tends to occur" (Laughs)
Bill: Doesn't necessarily mean it has to, but for most of us, it does.
Anastasia: (Laughs) Right.
Bill: And the final stages decline in old age. And so companies will do that. And so if you find a company that is, say, an adolescent that is growing and taking advantage of an early trend that has a big, big growth curve ahead of it, then you'll do incredibly well. So that's what it means to me. What does it mean to you?
Anastasia: I kind of related actually to what we've talked about before, which is the positive mindset, and not dwelling on the past, or using the past as a measure for yourself.
Bill: Well, in terms of finance, I have been in the investments business for years, and my wife, your mom, has been an accountant for years. We both live and work within the financial world. But in the accounting world, it's all about the past. It's about counting everything that occurred and making sure that you have an accurate record of your accounts. Investments, on the other hand, are all about the future. And the future is obviously uncertain. You want to do the best that you can to determine what's happening and attempt to look at trends, and ask yourself, how long is that trend going to continue and how big will it be? And when you can practice and do that over a period of time, you can be incredibly successful in stock investing.
Anastasia: It's like the difference between a fantasy writer and a sci-fi writer. One writes about past worlds and one writes about future worlds.
Bill: Yeah, exactly.
Anastasia: Cool. So the next quote is from Bill Gates: "I never took a day off in my 20s, not one, and I'm still fanatical. And now I'm a little less fanatical." What does that make you think of?
Bill: Well, it reminds me of my 20s, where when I was working for a paycheck (a salary) and thinking that I wasn't paid commensurate to what I was worth with my company, I decided to get into a business where I could get paid based off of results that I delivered for clients. And so the effort to do that kept me involved in my work for at least the first five years, probably to the tune of about 70 to 75 hours a week.
Bill: Because it was a matter of meeting a lot of people, talking to a lot of people, and hearing a lot of them say, "No, I don't want to talk to you." Hearing a few of them that said, "Yeah, I'll talk to you." A few less that said, "That sounds interesting." And a few less that said, "Yeah, let's go forward with this."
Anastasia: But it wasn't zero.
Bill: Yeah (laughs). But I mean, that just, it just took a lot of time. Plus, you know, it was like, I need to learn the craft. I have to learn what is a good investment, what's not a good investment. At that point in time I was working for a company so I didn't have the responsibility of administering or managing my own business. That would have been another thing that took a lot of time. But it was something that I realized that once I became proficient at it, I wouldn't have to spend those kinds of hours in the future. Was it somebody that said something like, "It takes 10,000 hours to become a master at something." Who said that?
Anastasia: Yeah, that's Malcolm Gladwell in his book, Outliers.
Bill: I haven't counted the number of hours, but it seems like 10,000 hours (laughs). But it was worth it, because it was something that I love doing.
Bill: I think there's a point where working those kinds of hours tends to become counterproductive. It's like, stop struggling so hard. You know, there's this thing called the Protestant work ethic. Have you ever heard of that?
Anastasia: No. What is that?
Bill: It was very common in the 1700s and 1800s, where Protestants were known for working extremely hard.
Anastasia: Oh, really?
Bill: And it was like, the harder you work the more godly you become, or something to that effect. And what I'm telling you is, there's no virtue in that.
Anastasia: (Laughs) Well, people nowadays, they're all about work-life balance. I mean, that's such a buzzword.
Bill: Yeah, it's a nice concept. I mean, frequently, you find yourself on one side of it or the other.
Bill: But I think instead of struggling, it's the mindset, I think, that it's helpful is just to be open to possibilities. Just be open to the possibility of not being so busy.
Anastasia: This also reminds me of something that I've seen on Reddit. There are people who are young, like 18, 19, 20, who want to retire early, and they want to take advantage of the compounding interest. And so they save everything they can, work multiple jobs, and build up this huge nest egg, which then grows over time so that they plan that they'll have this really solid nest egg by the time they're 40 or 50. So that's something I've been seeing lately is people who do that. It seems really intense and aggressive (laughs). I don't think it's for everyone. But Bill Gates did something like that, but in terms of building up a huge corporation that was super successful. He was fanatical, like he said, about work. And he expected the best of his employees too, and he just worked all the time. But now he has all this money and he can spend his time the way he wants to.
Bill: Yeah, he's on the right side of the compounding curve, obviously.
Anastasia: (Laughs) Yeah, obviously.
Bill: But you know, I think what he's done is he's switched his passion for what he did with the software system for computers, the operating system, and he's moved it into things that--
Anastasia: Solving world problems.
Bill: --Exactly. Things that if he can use that money, along with the $40 billion or $50 billion that he got from Warren Buffett to make a dent in some of these huge, worldly issues, then he'll have really made an impact.
Anastasia: Yeah, I don't know what we're advocating for. But (laughs) maybe working real hard in your 20s is not a bad idea.
Bill: Yeah, I had a client that had a very specific image vision in his head that when he went to work for a corporation, and he was, like, a middle level exec, that by the time that he was 50, he wanted to be financially independent, and he wanted to build a boat that he could then haul from Iowa, down to the Florida Gulf Coast and put in the ocean, and then sail, presumably, for as long as he was physically able to do it. He was so focused on that, that he made it happen. And in fact, in his off hours, when he wasn't working on his job, he was actually building the boat in his backyard. Which, with the mast got up to like, 50 feet high. And so the neighbors could see what he was doing. It was like, you know, Noah building an ark or something. And he finished this huge boat and then hauled it down to the Gulf Coast and sailed for 25 years.
Anastasia: 25 years?
Bill: It's the power of having a vision or an image that you want to go after and just staying focused on it.
Anastasia: Yeah, yeah. That's what I was thinking of while you're talking about that. Okay, next quote, Suze Orman says, "Well, when we are less stressed, we make smarter decisions. A Healthier You likely have more energy to work at a high level, work longer, if that's a priority, and may not have as many medical bills." What does that spark for you?
Bill: Well, to me, it's common sense.
Bill: Because to be able to make money, you have to be able to work and provide value to others so that they are willing to pay you for that.
Bill: An amount that is somewhat commensurate to the value that you brought to them. And to be able to continue to do that you have to stay healthy. I've always said in this business, that money is a very sensitive issue for people but the only issue that's more sensitive is their personal health. So if they're doing things in their life that cause their health to go bad because they're working too hard or are harming themselves, then that's not the kind of balance that you need. There are any number of things that people can do like taking walks--I like to take walks--and listening to music and reading a good book.
Anastasia: Yeah, listen to Taylor Swift's Folklore album.
Anastasia: That was very relaxing.
Bill: Just do the things that you love to do to keep a balance. And in the process, you'll be able to be better at everything that you do.
Bill: What does it mean to you?
Anastasia: I would say this is the opposite of what Bill Gates just said (laughs).
Anastasia: Bill Gates said work yourself to the bone in your 20s, because you can do it in your 20s. And Suze Orman is like, you've got to find a balance.
Bill: Suze's pushing 70 at this point. So how long ago did she get this advice?
Anastasia: She obviously has not stopped working.
Bill: She actually--what she did, she decided to give up her show and then she went to the Bahamas, I think, one of those islands off the coast of the US and spent a few years down there, and then after the financial debacle that occurred and the pandemic, she decided to come out of retirement and continue to help people. But I think now she's doing it from the Bahamas. (Laughs) Not some studio in New York City.
Anastasia: Well, that's the advantage of the pandemic, right? If you were already in the Bahamas, when this started. I do really believe in prioritizing your health. I worked a job that was the wrong fit for me personality wise, and it kind of exacerbated anxiety for me. I just could not wait to get out of that position. And once I did, I felt so much better. And I see other people who are stuck in jobs that undermine their mental health. And it just makes me feel for them, because I want them to be able to find something that fits them better or values them. That's what that quote makes me think of.
Bill: It reminds me when I was just getting started in the work world as a young adult that a family friend that had worked for the same company his entire career coming out of WWII had basically said, "How's the job interviewing process going?" I said, "Well, I got a job offer from a company." But I really wasn't that interested in it because it didn't fit what I wanted to do. And he looked at me like I was crazy. Like, you know, "You got a job offer, you should take it!"
Bill: And you just stay with it, forever.
Anastasia: Take the first job offer (laughs).
Bill: So I went through this whole process and it took another two or three months to find what I wanted. But when I did, I was very happy.
Bill: I think part of that has to do with the fact that he came of age during the Depression and he was not in a position to say no, "I'm not gonna take that job."
Anastasia: He didn't have other options.
Bill: At that time, any job would have been good.
Anastasia: Yeah. But the world changes and you were in a different situation. So the next quote is from Mark Cuban: "I've learned that it doesn't matter how many times you failed, you only have to be right once." What do you think? Do we like that quote?
Bill: Well, I agree with what he's saying. Personally, failure is not in my vocabulary. You don't fail at things. You simply tried something that didn't work and then you made adjustments, and you go at it again, and again, and again, until it works. That word "failure" to me has an emotional connotation. When I think from the perspective or the mindset of saying, "Something either worked, or it didn't work," that doesn't have any emotional connotation to it. And it just makes it that much easier to go at it again.
Bill: But you know, I agree in concept with what he's saying. What do you think?
Anastasia: I'm just thinking about how when I was growing up, you would tell me not to say that I failed. I wouldn't say you yelled at me, but (laughs)--"Don't say you failed, "Okay, I'll try to do better next time. You're like, "There is no try!" You would go all Yoda on me. You would say (laughs), "Do or do not. There is no try." So yeah, that's what I kind of think of when you talk about that (laughs). That's just not a part of your life philosophy. I guess Mark Cuban is saying more here--get back up, because all it takes is one time of doing it right and you could be set for life.
Anastasia: If you pick the most amazing stock ever, maybe you'd be set for life. But I think it's just kind of that attitude of just getting back up and doing it again--that resiliency factor. Which, oo, so my husband and I have been watching an inordinate amount of the Great British Bake Off, which is this very cutesy, baking show with British people who pretty much support each other, even though they're all competing against each other. It's a very congenial atmosphere. And we found that during this pandemic, it's very relaxing and comforting. It's like a warm blanket when we're watching it.
Bill: Oo, I'll watch it.
Anastasia: It's just about people baking and it's fun, and it also makes me want to eat dessert. So maybe that's not such a good outcome (laughs), but it's really fascinating to me, because having watched several seasons that are on Netflix, I've seen a number of different contestants go through the wringer. And every time, there's always at least a couple people who talk themselves down or they're like, "I can't do it." And then the host comes by, and they kind of pep them up like, "You can do it!" And they're always very grateful. You can tell, almost, going into the final Bake Off, who's going to win just based on their attitude. No matter what, if someone else has had better bakes, a lot of times what I've seen is the people who go in confident, and just knowing that they're going to do their best and not leave anything off the table. No matter what, it's not a failure, I'm happy I'm here, and I'm going to do the best that I can. And those people end up winning more often than not. And the people who talk themselves down or think that "Oh, there's better bakers around." And like, "Oh, I'm not confident about my skills with this. I've never made this before." They fail more often.
Bill: Which is kind of the rule of you get what you think.
Anastasia: Yeah, no, that's exactly it. So it's just a little theory of mine that I've been seeing play out while watching the show, and it's really interesting.
Bill: Yeah, that is interesting. There's one example that I'd like to add, which is that some of this has to do with various systems of government. Like, for example, the American system of capitalism really does offer people a second, and a third, and a fourth chance at things. My nephew grew up in Brazil, and as a teenager, he wanted to be an engineer, and he wanted to go to engineering college. Their system there had an entrance exam that if you pass it, you're in. It was rather stringent. And if you didn't pass it, then you couldn't be an engineer.
Bill: There were no other ways around it. You had one shot at an academic exam to be an engineer. So he wound up coming to America and got into a different profession. And he passed a number of tests and earned a designation of the highest distinction in that profession. And he has a solid job and likes what he's doing.
Anastasia: I mean, why did he choose to go for an engineer position?
Bill: I think he just thought that he would be interested in it.
Bill: And when he didn't pass the exam, he was devastated by it. It's like, “Now what?"
Anastasia: I mean, people take the LSAT multiple times. They'll take the LSAT, the ACT, the SAT, the MCAT, the GRE for grad school. They can take those multiple times. It isn't a one shot, you're done, right? You're out?
Bill: Well, in their system, it was. Just one of the reasons why I'm grateful to be alive at this time in history and in America.
Anastasia: Yeah, what a patriotic message. (Laughs) So the final quote is from Richard Branson, Virgin founder, and he wrote, "You'll never be successful, if you don't love what you do, and wake up every morning excited."
Bill: What that brings up for me is one of my favorite people of all time, you know who I'm gonna say, Joseph Campbell.
Anastasia: Oh, yeah (laughs).
Bill: His classic advice was, "Follow your bliss." And in the world of accomplishment and money, he said, "If you follow your bliss, you will always have your bliss, money or not. But if you follow money, you may lose it, and you will have nothing."
Anastasia: So don't follow the money?
Bill: He said that he never was focused on the money. He was focused on what it was that gave him joy and a passion--
Bill: --and by doing that, the world responded, in kind, with money coming to him. It's like money is a form of congealed energy and releasing it, releases the possibilities in life. So he focused on doing things that he loved and as a result of that, it benefited other people, and people gave him money. I thought that was pretty cool.
Anastasia: That is cool. I think we can connect this to what we talked about earlier. Wait, just wait. I'm gonna blow your mind. Okay. (Laughs) Joseph Campbell, for those who don't know, is a mythologist. And so he was kind of a leading pioneer of the concept of the monomyth, which is that if you look across all of these different world cultures, there's common elements in the stories that they tell people. And he created this idea of the hero myth, or he talked about it, at least, and ended up having a really interesting five hour interview with Bill Moyer called "The Power of Myth," at the Skywalker Ranch. Because his writing influenced George Lucas to write Star Wars, which is one of the most successful franchises in history, he created the character Yoda. (Laughs)
Bill: Our little friend!
Anastasia: I can't do a Yoda voice. I'm not gonna even try. (Laughs) So yeah, there's that connection. I guess one question for you as an experienced person. What do you say to people who are not doing what they love, and they want desperately to do what they love?
Bill: I would say sometimes it's not easy to disengage from that because of, perhaps, obligations that they have or responsibilities that they have. It's harder when people have debt, and they don't see an immediate Plan B or Plan C. But I think if you have a pretty solid idea as to what your vision is, and what your passion is, that you constantly keep that in front of you, and that you do what you can to change or influence your current life towards what you want to accomplish. For me, it was to have my own business and to help people financially to make a positive difference in their financial lives. And it was fun when I started working for a company, a brokerage company, that allowed me to be in the business, but it didn't give me that autonomy that I was looking for of having my own business. And so it took me 20 years, but I got there.
Anastasia: By keeping that vision in front of you the whole time.
Anastasia: Cool. Well, we have had a couple of episodes based on people's questions. We're encouraging you to submit questions. If there's something small you want answered, we can do that at the beginning of an episode like we did today, or we'll base a whole episode off of it. So, do you have anything else?
Bill: Nope. Thank you.
Anastasia: Thanks, Dad.
Anastasia: Thank you for listening to Creating Wealth! If you liked our podcast, please subscribe and consider recommending it to your friends or leaving us a review on your podcast app. We would love to discuss your questions. You can email them to us at email@example.com. You can also find full transcripts of every episode on taberasset.com. That’s Taber with an “e” not an “o.” Thank you for joining us on the path to financial abundance. We’ll see you next time!