The Last Safe Investment: Spending Now To Increase Your True Wealth Forever by Michael Ellsberg and Bryan Franklin is a combination self-help and retirement-planning book. The authors argue that the typical American retirement plan is broken. They offer an alternative that will better serve one’s retirement as well as one’s present and near future. At its core, the author’s alternative is about viewing yourself as your primary investment vehicle for your future.
Ellsberg and Franklin introduce three “true wealth disciplines”: systematic spending, increasing your value to other people, and improving your happiness exchange rate. These disciplines, when cultivated, lead to three “true wealth assets”: adviser equity, tribe, and savings. If you invest in yourself by building the three disciplines, the three assets will better provide you with a happy retirement than the 401ks and vacation homes of a traditional retirement plan.
True Wealth Disciplines
Spend systemically: Evaluate the value of spending within your whole life not just that item’s category. View expenses as life investments and spend accordingly.
Increase your value to other people: Your value to others = match between your behavior and other people’s desired outcomes. Investing in your value is your greatest leverage point to increase your future earnings.
Improve your happiness exchange rate: Figure out what makes you happy. Figure out how to increase happiness efficiently (more happiness for less dollars).
True Wealth Assets
Adviser equity: Provide value to new enterprises, typically in the from of advice but maybe other forms of labor. Get equity, cash it in some point in the future.
Tribe: Community of people who share same values and are connected to one another. Provide you with resources/earning potential and also will make you happier (connections and experiences)
Savings: Cold hard cash set aside. Yes, this excludes monetary investments such as stocks and bonds.
For a majority of the book, Ellsberg and Franklin outline “super skills” which are the best ways to increase your value to other people. Super skills are presented in four categories: interpersonal (leadership/influence, public speaking, visioning, teaching, selling, networking and building tribe, and holding paradox), creative (context importing, improvisation, writing, copywriting, reading, storytelling, and design), technical (mental models, financial models, systems thinking, web development, direct marketing), and physical (longevity, mental focus, clean healthy appearance, clean and organize environment, healthy relationship with substances, and healthy relationship with your sexuality).
I would grade the book as fair. Ellsberg and Franklin present a novel solution to a commonly perceived problem. I am not totally sold on their system, not enough to stop contributing to my IRA. Their true wealth disciplines are all fine pieces of advice. Nothing revolutionary there, but also enough off the beaten path to be worth writing. The true wealth assets part of the equation is where I’m very skeptical of their advice.
I’m not convinced that after a lifetime of following their true wealth disciplines you are better off with adviser equity, tribe, and savings than a 401k and a vacation home. The stock market is robust in the long run and if you start early (see my next point about willpower) you should be set up for life, especially if you practice the true wealth disciplines. Adviser equity sounds like a nice but unpredictable way to score big (like trying to pick individual stocks). Some people hate tribe! And savings is nice, but again, I’m not quite sure why the authors are so averse to setting up an IRA over cash and money market funds.
Another flaw in the book is the authors’ dismissal of willpower. In the introduction they say any workable plan (which they argue theirs is), “must not rely on willpower, or behaviors that people know they should do but few actually do”. Retirement is just a form of saving and saving is all about delaying gratitude (an exercise of willpower). The requirements of the book’s plan (spending systematically, increasing your value to other people, and improving your happiness exchange rate) all require willpower. In fact, I think the authors spend most of their book telling the reader what “they should do but few actually do!” This caught my attention after reading Willpower: Rediscovering the Greatest Human Strength by John Tierney and Roy Baumeister. I think Ellsberg and Franklin provide good advice that most of us should follow, but they are kidding themselves if they don’t think it relies on greater willpower to put in practice.
Ellsberg and Franklin’s true wealth disciplines are good advice worth following. I want to incorporate them into my life. But I’m not in a rush to center my future around adviser equity, tribe, and cash savings.
PS – Thank you to my friend Isaac Morehouse for the book recommendation!