A few years ago, a movie called The Gambler came out, starring Mark Wahlberg. It was a decent movie – I’m not here to do movie reviews – but there was one portion in the middle where a minor character played by John Goodman gives a monologue about what a person should do if they find themselves up a couple of million dollars. Here’s that speech, but be aware – it’s full of adult language.
The point of Goodman’s monologue in the movie is that if a person ever finds themselves with a couple of million dollars, that person should build their “fortress of solitude.” In his terms, that consists of a decent house with a good roof, a reliable car, and the rest of the money put away in investments that will very reliably return a few percent per year. Let’s say you have $2 million. You buy a $300,000 house with a good roof on it, buy a reliable $40,000 car, and put the other $1.66 million away in an investment and withdraw 3% a year, which is basically $50,000 a year, for the rest of your life.
At that point, you basically don’t have to work for a living any more. You don’t have to put up with being treated poorly by an employer – you can just walk and you’ll be fine. You can try new things and see if they work out. Furthermore, if you do manage to earn some more money beyond that, you can take some risks with it. You can invest in your brother’s dream of running a restaurant. You can help your computer whiz nephew to start a dot-com business that he’s been tossing around. You can invest deeply in a particular collectibles market that you’ve always enjoyed because it scratches some nostalgic itch.
I wrote about the actual ins and outs of this plan a couple years ago, because Sarah and I are basically aiming to have our own “fortress of solitude” at roughly the exact moment our youngest child leaves the nest.
However, rather than talking about the goal, I want to talk about the road to the fortress of solitude.
Work, Luck, and Risk
In my experience, there are basically three elements that play into what your financial journey will look like.
The first element is work. Are you willing to work hard in order to earn money? Are you willing to make hard choices to preserve the money you earn, meaning you choose not to spend it on frivolous things? Are you willing to work evenings and weekends to do a little more than the next person? Are you investing your time into skills that you can use directly to earn more?
The second element is luck. Luck indeed has a lot to do with the hand you’re dealt – the situation into which you were born, the genetics handed to you by your parents, and so on. The trick is to ignore that luck and focus instead on the unexpected events in your life going forward from here. What are you doing to ensure that bad events are less likely and have less impact? What are you doing to ensure that good events are more likely and have greater impact? You can’t force bad events not to happen or good events to happen, but you certainly can take action to alter the odds a little, reduce the impact of bad events, and improve the impact of good events.
The third element is risk. Are you willing to take a chance at a bad result in order to improve the typical result or have a chance at an incredible result? Are you willing to take on a job that’s incredibly challenging where you might utterly fail, but it gives you a chance to succeed spectacularly (like, say, joining a startup)? In general, the lower the risk, the lower your income is, but the more stable it is. A really stable job might give you a very high chance of reaching your fortress of solitude in 20 years, but very little chance of getting there in ten. A risky job might give you some chance of getting there in ten years, some chance of getting there in twenty, and some chance of basically never getting there.
Those three elements work together and play off of each other in determining your long term financial success. If you don’t work hard, take risks, and cultivate luck, it’s going to be very challenging to build up a fortress of solitude. You need to do all of those things to some degree to build a strong financial path.
Here are some thought on each of those areas and what I’ve done to use those elements in building my own fortress of solitude.
The Elements of Work
For me, work refers to any situation you’re doing something other than what you’d otherwise want to be doing for the sake of earning money or other resources that you can turn into greater opportunities later. If I’m doing something I wouldn’t otherwise be doing if I weren’t being compensated, I’m working.
Sometimes, people do get paid for doing things they’d otherwise be doing. I look at people who sleep on the job and get paid or people who have work tasks they should be doing but are otherwise looking at social media or doing online shopping as examples of this. Those people would likely be sleeping or web browsing if they weren’t at work, to be quite honest. The thing is, during those times, they’re not contributing any value to their workplace and that path is likely not leading to any future opportunities of note.
There’s also a wide range of work difficulty. Some work is very physically or mentally demanding, leaving you exhausted at the end of the day. Some work is simple and you don’t feel drained after spending several hours working. I’ve worked at all kinds – jobs that didn’t really deplete me at all, jobs that were physically demanding, jobs that were mentally demanding, and a few things that were both.
My experience has been that in general (with some impact from luck and risk), the harder you work, the better your financial rewards are most of the time, in both the short term and the long term. If you go to work and bust your rear end, people notice and that ends up benefiting your career most of the time. If you start a business and work hard to make it successful, you’re much more likely to find some degree of success with that business most of the time.
For example, the hardest I’ve ever worked in a traditional job occurred in the early to mid 2000s, where I singlehandedly built a rather large software project used by a lot of people. This resulted in a very stable job, a lot of offshoot consulting gigs, and a strong professional reputation. The hardest I’ve ever worked on a side gig was The Simple Dollar, which ended up more successful than I could have ever dreamed. I worked hard at other things and didn’t work particularly hard at others, but I almost entirely found that the level of success was strongly linked (though not absolutely linked) to my genuine hard work.
Work smart. Work hard. If you do that, you’re very likely to reliably earn money and have plenty of opportunity to earn more.
Remember, at any given moment, you’re competing with others. Some of those people work harder than you, while others work a lot less than you. Which of those groups is more likely to get a raise or a promotion? Which of those groups is more likely to get a pink slip?
So, what can you do? When you go into work, work hard. If your tasks are complete, put in effort to improve your skill set or take on another task. If you don’t know what to do, sit down with your boss and talk about a plan that will take you toward a raise or promotion, and then when you don’t have an obvious task to do, work on that plan. If you have a big project coming up, get as much as you can done early in the project cycle so that crunch time isn’t devastating. If you’re not willing to do this, you shouldn’t expect the rewards that will come to those who do.
The Elements of Luck
Luck, in my terms, simply refers to events outside of your control that can affect your life in some respect. Good luck includes events outside of your control that have a positive effect, while bad luck includes events outside of your control that have a negative effect.
A key thing to remember is that luck is an element of life that’s partially under your control and partially out of your control. While you can’t control the actions of others or the impact of unexpected events, you can certainly shape and guide those actions and the impacts that they have on you.
For example, if you build a strong, positive professional network and social network, you’re introducing not only a lot of possible opportunities for good luck in your life, you’re also providing some protection against bad luck. A professional network and social network will often advocate positively for you when you’re not around, point you toward opportunities, and provide help when you encounter a difficult period.
I’ve written extensively in the past about things you can do to improve your luck, both in terms of minimizing chances of bad luck and maximizing chances of good luck (as well as your ability to take advantage of good luck).
The Elements of Risk
Risk, in my terms, simply means the amount of exposure to danger that some aspect of your life has. I often see it as the exposure of some of the fruits of your hard work to the vagaries of luck. Life itself has some risk – we always have a chance to lose things we care about – but we have a ton of choices in front of us to increase or decrease risk in our lives.
For example, if you go through life without an emergency fund, you expose a lot of your life to a higher level of risk. If you build an emergency fund, you reduce the exposure of a lot of your life to risk.
You can choose to put your money in risky investments or in not-so-risky investments. If you’re relying on having that money going forward, then you’re putting other elements of your life at risk as well; if you can manage in life without that money, then you’re actually contributing less overall risk to that investment.
There are times when it makes sense to lower our level of risk, such as when the bad effects of an outcome we don’t want are way more painful than the good effects of an outcome we do want. There are other times when taking a risk can pay off, such as when the good effects of the outcome we want are far more beneficial than the bad effects of the outcome we don’t want.
For example, I’m not interested in risking my children’s safety, no matter what the price, so I’m going to do things that will likely cost me time and money to minimize risks to them. On the other hand, if I’m spending my spare time writing a piece of fiction that I hope to sell or submit to awards contests, there’s much less downside to taking a huge risk with that writing. What do I have to lose?
The Overlaps of Work, Luck, and Risk
It’s the overlap of those three elements that ends up defining a lot of what we have in life.
A hard worker is likely to have better outcomes than the person who doesn’t work much at all.
A person who has cultivated good luck is likely to have better outcomes than the person who hasn’t cultivated good luck.
A person who decreases the risk on things that are important and increases risk only on things that aren’t a big deal to them is likely to have better outcomes than the person who is risky with everything or risk-averse with everything.
None of those things are a guarantee, of course, but if you line them all up side by side, you end up with a pretty clear recipe for building a path to your fortress of solitude and beyond.
Work hard. Don’t sit around idling unless it’s leisure time or you’re genuinely preparing yourself for meaningful action. When you don’t have an immediate task on your plate, take on a task to improve yourself or improve your situation. Have a plan in place that takes you to where you want to go next in life and put genuine, consistent effort toward successfully completing that plan.
Do things that create good luck in your life. Build strong, positive relationships with people that last and put in effort to sustain them over time by touching base frequently. When you have a good idea, stop and write it down and actually take action on it later. Find mentors. Be a mentor to others. Treat other people as you would like to be treated at all times, regardless of whether you know them or not.
Avoid things that create bad luck in your life. Don’t talk negatively about others, particularly behind their back. Don’t burn bridges when a situation changes. Don’t sabotage others. Don’t treat the world as though it only has one winner – in reality, the pie grows over time, so your slice will, too.
Don’t put things that are really important at risk. Have an emergency fund. Make sure that you and the people you rely on always have the fundamentals for a good life available to them. Don’t engage in unethical behavior. Don’t do things that could damage your reputation if they were found out.
Take risks with things that are less essential. Write that novel with that surprising element. Step up to that hard task at work – you won’t get fired if you work hard at it but it doesn’t quite turn out. Ask that girl or that guy out on that date – the worst thing that happens is she says no, and then you’re basically back where you started anyway. Haggle on the price of that item.
If you’re doing all of those things together, you’re building your fortress of solitude, even if you don’t have a lot of money in the bank just yet. You are on a path to a point in your life where the key things you need are secure and you’re able to say “no” to a lot more things than you were in the past because you don’t need that money that’s dangling in front of you.
It starts with working hard, building good luck, downsizing bad luck, minimizing risk to the important things, and amping up risk to the less important things. Those are the core elements on the road to success, whatever that success might be.
You can do this. You have the tools. You just need to make the choices every day. You need to work hard. You need to build good luck and minimize bad luck. You need to manage risk smartly.
Do that, and you’ll have your dreams. Do that, and you’ll have your fortress of solitude.