Who Is Nick Maggiulli?
Nick Maggiulli is the Chief Operating Officer and Data Scientist at Ritholtz Wealth Management, where he oversees operations across the firm and provides insights on business intelligence. He is also the author of OfDollarsAndData.com, a blog focused on the intersection of data and personal finance. His work has been featured in The Wall Street Journal, CNBC, and The Los Angeles Times. Mr. Maggiulli graduated from Stanford University with a degree in Economics and currently resides in New York City. You can follow Nick on Twitter @dollarsanddata
1) So much of your writing is about how people view and use money in ways that may not necessarily be advantageous to them – you mix life philosophies with finance. What inspired you to look at personal finance and investing in this way?
I didn’t grow up with money, so I think that’s allowed me to realize how precious it can be. When I see people who have so much yet misuse it, it sets off alarm bells in my head and makes me realize there are far better ways to go about it. So I’ve tried to keep that in mind even as I have started my wealth-building journey.
2) What are some conventional pieces of personal finance or investing wisdom that you’ve found aren’t true?
I think the biggest one is you can build wealth by cutting your spending. Yes, this is technically true, and can work in the short run. However, for most people it’s their higher income that builds wealth, not their spending. If you look at the data, income is more positively correlated with savings rate than any other financial measure. Of course there are some people that spend too much, but they tend to be the exception not the rule.
3) Your recently released book is titled “Just Keep Buying” What should investors “just keep buying”?
The mantra for Just Keep Buying is “the continual purchase of a diverse set of income-producing assets.” So, the answer is income-producing assets, which includes diversified baskets of stocks, bonds, real estate, etc. Anything that has reliable cash flows is income-producing and can be considered within your investment portfolio.
4) The last two years have been a roller-coaster ride in financial markets. It seems as if markets are now moving faster. How do you think this affects investing decisions and mindsets?
As information moves more quickly, you would expect asset prices to reach their equilibrium levels more suddenly. Where this would show up is in volatility, but I’m not as well versed on the research in this space. Either way, it may cause people to react more swiftly in the future as well. I’m interested to see what behavioral finance will discover about peoples’ investment decisions in the future
5) You work directly in wealth management. What are some ways you’ve seen the industry changing from both a product development and customer interaction perspective?
I’ve only been in the industry for a few years, but the name of the game right now is value-up. Instead of cutting fees, most wealth managers are adding more services and value to their clients. I think that is the path forward that makes the most sense and I think we will see more consolidation of services in the coming decade. The more value you can add, the less fee pressure you should feel.