Last weekend, I reviewed The Shortest Investment Book Ever by Jim O’Donnell and today I have the opportunity to interview him. I thought that Jim’s extensive financial experience and his love to educate was something I should take advantage of and he willing subjected himself to my hard hitting investigative journalism. 
Good morning Professor O’Donnell, I thought The Shortest Investment Book Ever lived up to its billing, being both short and informative in a way that is not intimidating in the least. Often times investing related books assault the reader with a mountain of data, but not so with your book. What led you to write The Shortest Investment Book Ever?
There is no shortage of investment and budgeting books out there already. But they don’t address the 401(k) and the 403(b), which is the chief retirement savings tool for about 62 million Americans. My book targets those many, many “savers” who are often overwhelmed by investment choices at work and may, therefore, do nothing or do the wrong thing.
I also don’t want people paying additional money (they may not have) to get “help” which often times is, even from honest brokers, a sales pitch. But my book is also intended for those who don’t have a 401(k) or a 403(b). It will help lots of people better understand Medicare, Social Security, and IRAs, which are also important aspects of retirement savings.
Were there any chapters that were cut from the book that you would have liked included?
Actually, no. In putting the I book together, my editors and I had some tussles over content. But I wanted LESS, while they wanted MORE, and kept suggesting more chapters that I might develop as briefly as I did the ones we have. Some of the chapters in the book, on, for instance, socially-responsible investing, were not my idea. I think they are good topics. But I didn’t think they belonged in the SHORTEST investment book ever.
What led you to leave Wall Street and begin teaching? In your book, I get the feeling that it’s a mentor speaking to a mentee; it works quite well in welcoming the novice to the world of retirement and investing.
I was a school teacher for seven years after college. In many ways, I loved it. All my life, I have wanted to have a life-long, and I hope positive, impact on others. I left teaching junior and senior high school, discouraged after our upstate New York community voted down the budget a couple of years in a row. I also seemed to think that my students were more capable of excellence than my administrators thought. I was then – and still am today – a demanding teacher. I’m not in the classroom to serve time and accrue retirement credit. That led to tension and some soul searching with my administrators.
So I went off to Columbia U. in New York City and got an MBA in finance and accounting with the hope of helping people in a new way. I continued to try to do that with clients and staff as I rose in the mutual fund world for a couple of decades. Then, a powerful, reorienting, religious experience in the mid-80s caused me, in time, to leave the business world and invest in the education of the next generation. In a sense, I went back to the classroom, sort of like “back to the future.”
With all the talk of a recession, what do you think most people should do to prepare for it and, should we be so lucky, what should we do to benefit from when we exit the recession?
To prepare for the recession that is upon us: We need to examine our own houses. We need to spend less, save more – sometimes LOTS LESS. We need to discipline our sometimes crazy natures to understand the difference between WANTS and NEEDS. I’m convinced that contented people – which should be our goal – don’t necessarily get what they want but they learn to live with and maybe like what they get.
For those near retirement, the recent market drubbing is, of course, more challenging. We may need to defer some dreams, keep working a bit longer, and rework our budgets and plans. We may need to learn to live on less and reinvigorate such easily overlooked joys as time with family and friends, being or becoming involved in community or church work, even enjoying simple, cheap pleasures, like a movie at home with friends or family.
We’ve got to challenge the cockamamy notion that, if I don’t spend a lot of money, we can’t enjoy life or that we’re not a “success”. Nonsense! For those of us – even if we’re near retirement – and still saving for retirement, check your asset allocations. Get them back in line. Don’t let the numbness of the disaster knock us silly or punchy.
Don’t chase the “hot” asset of today – cash or Treasuries – as if that will save you. (It won’t.) What you can save in your retirement plan today is being accumulated at bargain basement prices. This is especially helpful the farther we may be from retirement, but it can help “oldsters”, too. Young people are going to be great beneficiaries of this meltdown, if only they have the courage and discipline to save and accumulate quality, low-priced funds at these once-in-a-lifetime prices.
To benefit when we exit this recession: (And we will!) Read the above comments on preparing fro the recession.
I read a brief biography about you and saw that you had an extensive history of working with wealthy investors during your time at investment powerhouses such as Fidelity. What sorts of things have the wealthy done “right” with their investments that everyone can incorporate into their strategy?
The wealthy also can spend foolishly. But the smart ones are not extravagant. They know that capital is hard to make and still harder to accumulate. Many live very modestly, dressing and driving, for instance, NOT to stand out. Many have strong families and good marriages. A family breakup is a powerful stimulus to poverty, whatever we had before the blowup.
So, stability is something that the wealthy seem oftentimes to have. Many wealthy people I worked with are far less risk-oriented than one might expect. They almost sense that they have been lucky and don’t want to test fate. Much of their risk taking may be confined to a business, say, not to their investments. They – the smart ones – don’t put too many eggs in one basket, even if the baskets can be very large.
What do they do wrong that we should try to avoid?
Hard to generalize there. But it wasn’t investment stuff that marked “what they did wrong.” After all, they were paying me for advice. What the most foolish of the wealthy I met or worked with did was to let their pride or arrogance or the certainty that money can fix or buy anything go to their heads. Some feel that money is the standard by which all – including everyone around them – is to be measured. While most wealthy people I worked with were good folks, some were certifiable jerks – just like some of us who have no money. I worked with lottery winners, sports, movie, and TV stars that were princes and princesses and with others in the same fields who seemed to think everyone was a bellhop or a porter, fortunate to be in their presence and to take their abuse.
One question I’ve often asked myself is, knowing what I know about life in general, what advice would I give to myself ten years ago. Given your experiences and knowledge, what advice would you have liked to give yourself many years ago? (financial, or otherwise!)
What an interesting question, Jim.
First, I’d say that the important stuff is the relational stuff, not the money stuff. The money stuff is just a “funding vehicle” to enhance the relational. In the end, PEOPLE matter, not stuff or things. On the other hand, we have to be good stewards of much of the stuff and things we have been given. I’m a person of faith, so I put my trust in unseen things. I know others of great faith who seem to despise “stuff and things” and seem to value only what is eternal and invisible.
Here, I beg to differ with them. While we are in this world, we must not treasure our “stuff,” but neither should we neglect or misuse important, helpful things -even money – we have. They can helpfully serve us and others and, when cared for, can last, making us able to spend more on others or other NEEDED things. I’m uncomfortable with both those who think money is the measure of all things AND, too, with those who think it is the measure of nothing, that it is meaningless. The latter folks practice irresponsibility and think it is faithfulness or praiseworthy selflessness.
Lastly, I would say we all need to do the best we can with the gifts and talents we have been given. I think I used to believe that life would get easier as I grew older. It has not. It’s hard. There’s trial. There’s suffering. There’s reversal. There’s loss. (See my first book at www.lettersforlizzie.com.) But there’s lots of joy and lots of beauty. too. We have to manage through it all, not just through the good or the easy. We have to avoid fantasizing, too — a real, real problem in a world of endless pop culture and celebrities.
We need – all of us, young and old – to finally grow up into mature people who can make this broken world a better place for us and others.
This week’s 
When you get down to the core of money, it’s really just an abstraction of natural resources. You accept money for your labor because, ultimately, it can buy you the things you want. Food and shelter, at the core of Maslow’s hierarchy of needs, are just two of the things you can buy when you have money.
Reader TTFK sent me an email this morning about the “Credit for Qualified Retirement Savings Contributions,” also known as the Saver’s Credit, claimed on 
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