Over the years, I’ve distilled how I think about money and investing into 10 rules. I use these in my own life and portfolio, and they can benefit you, too.
1. Start with Planning
The sad truth is that most people spend more time planning their vacations than they do their financial security and future.
But there are three reasons why – 1) most people don’t know what to include in a financial plan, 2) nobody thinks it will be very fun, and 3) most people worry that the result will be discouraging.
Well –
#1 is easy to solve – a good financial planner can help.
#2 is not true – if you have a guide who encourages you to dream about your future and not hold back, planning can be very fun.
#3 is not true, either….financial plans are the vehicles for reaching your goals, so the process itself is ultimately very encouraging, in large part because most people are better off than they realize.
Why is planning important? Read rules #3, #4, #8, #9, and #10!
2. Invest Automatically
One of the best ways to build wealth is to not think about when to invest and simply automate your contributions. If you are waiting until the right time, or you are relying on your memory and initiative to invest, you are hurting returns and making your goals harder to reach.
Automatically Investing is like finding a $20 bill in a pair of pants – what a great feeling! You didn’t miss the money when it is withdrawn from your bank account, and then it magically appears – plus growth – in your brokerage account!
You will be amazed at the return you receive from this easy, set-and-forget strategy.
3. Diversify Intelligently
Diversification is essential, but it has to be thoughtful. Most people are either under diversified or over diversified – both will give you substandard results over the long term.
I believe in diversifying your investments over select asset types, geographies, and even investment styles. Blending traditional approaches with data-driven strategies like Momentum Investing (see my website) can make portfolios more resilient as markets shift.
4. Maximize After-Tax Returns
Individuals in California pay over 32% of their $300,000 salary to income taxes (based on 2025 brackets). Couples in California pay over 33% of their $600,000 combined salary. The long-term capital gains tax rate is 15-20% (minimum). Yes, taxes are important! Taxes should be a key consideration for both your investment strategy and tactics.
What you (and your investments) bring home is the most important measure, not the gross income or gross return. A good advisor can help you limit your taxes, often more effectively than your tax accountant.
5. Pay Attention to Price
Even great companies or funds can be poor investments if you pay too much. Price matters.
Many investors don’t know how to determine whether a price is high or low, based on historical or current-day metrics. By using price to understand the value of what you are buying, you give yourself a time-tested way of maximizing your future returns and avoiding material setbacks.
6. Data-Based Systems beat Intuition
Financial markets generate reams of data, and that data is useful. If you are a technology employee, you probably have an affinity for data when making decisions and forming strategies. Academic studies across the social sciences have concluded that data-driven approaches outperform expert intuition across a wide range of decision-making.
At Prospero, not only do we use data to make portfolio construction investment decisions, we use data-based strategies for investing, such as Momentum Investing. Data is plentiful – don’t guess!
7. Win by Not Losing
Protecting capital is one of the most powerful things you can do. Big losses make compounding much harder, while avoiding them allows compounding to deliver surprisingly powerful results.
This doesn’t mean avoiding risk. It means respecting and understanding risk, making sure it works for you most of the time and never works against you in a material way.
Which portfolio would you rather have: One that goes up 7% a year for 4 years, or one that goes up 15% for 3 of the 4 years, but drops 15% for one of the years? Do the math!
8. Stay the Course…
First, you can’t stay the course without a plan (your plan defines your course!). But even if you do have one, it’s easy to question or deviate from your plan when volatility or headlines spook the markets (and you!).
But, if you have a “stress-tested” plan that you understand and believe in, it is smart to stay the course. This too shall pass.
If you don’t have a course to stay on, you are less likely to reach your desired destination. That is why “Start with a Plan” is my #1 rule!
9. …but Adjust Course Along the Way
Sometimes it makes sense to rechart your course. Your life and your goals change. Careers shift. Families grow. Market and investment opportunities emerge. A good financial plan is a living document; it is always changing with you and your circumstances.
At Prospero, we believe in revisiting plans regularly to ensure they stay aligned with your goals, your needs, and the markets.
10. Don’t Wait to Enjoy Your Money
Statistics show that many investors have more money when they pass away than when they retire. That’s great if your goal was to leave money to your heirs. But if your mantra is “you can’t take it with you”, you are going to be disappointed.
People often hesitate to spend because they don’t have a plan and they worry that they will run out of money. I see people wait too long to spend or travel, and then age limits what they can do. Lifetime goals and opportunities are squandered.
Money is a tool to help you live the life you want; it’s one of the reasons you are working hard and starting to plan ahead. Don’t let hesitancy or a lack of information keep you from living well.
Final Thoughts: Rules That Create Confidence
These 10 rules aren’t about guaranteeing results or trying to outsmart the market. They’re about building discipline, reducing risks, and creating a plan that gives you the potential to grow wealth steadily while enjoying life along the way.
Interested in learning more about my 10 rules? Schedule a consultation to see how these might help in your financial life and sign up for my newsletter to gain more insights.
