Ben Carlson: How to Build Wealth When Everything Is Expensive

You've mentioned the risk profile a couple of times, obviously speak about it in your book.

Do you have any practical tips for people listening that can help really build that muscle of taking risk?

I do think so.

There's three ways of thinking about like what your actual risk profile is.

So there's your willingness, need and ability to take risk.

right so your need to take risk is kind of like what is my end goal what kind of return do i need to reach that goal right what's what's my expected return have to be to get this end state so you can quantify that in some ways right my range of outcomes has to be this i'm starting with this much money i'm saving this much Your ability to take risk is really your, what's your stage in life, right? How old are you? How much money do you make? How much money are you saving? So these kind of things can be quantified, right? You put those inputs, you can put these inputs into, you know, any sort of calculator.

The hard one is your willingness to take risk because a lot of that is shaped by your personal experiences and your, you know, your appetite for risk.

And the problem is your perception of risk changes over time because if things are going really well, you probably feel like, oh, I'm invincible.

I am doing awesome.

The stock market goes up all the time.

I'm a genius.

And then when things are going down, you go, oh, gosh, this is never going to end.

Oh, my God, I can't handle this.

Now I feel like an idiot.

That's the hard part is how much do your emotions change over time.

So I do think there's some mentality there that you have to get out of the fact that – just because the market is doing something does not mean that you're any smarter or any dumber, right? As long as you have a plan in place.

And so I think one of the ways to do that is to put some plan in place before to guide your actions, right? So a lot of the stuff we like to do is just rules-based, right? if X happens, I will do Y, right? If A happens, I'm going to do B.

And it's not always perfect, but I think you want to get to the point where you're making those good decisions ahead of time and doing the heavy lifting before it happens.

So you're not allowing those emotions into the equation.

So you know what to do, right? All right.

If the stock market falls 10%, I'm going to move money from my savings account into the market and put some more cash to work or, you know, whatever it is.

If the stock market is up 30% next year, I'm going to sell a little bit and put some back in my cash for reserves.

You know, Something like that, that you can have some rules to guide your actions so you're not trying to figure it out on the fly.

Because if you make the decisions when the emotions are running high, it's gonna be much harder.

I talk about it in the book.