Remember the book The Millionaire Next Door? Our office enjoyed this popular book because it highlights the traits that show up in many successful families who will never be in the spotlight. We were reminded of some of these same lessons when we revisited a “tortoise and hare” story shared by financial writer Morgan Housel. In it, Housel compares the investment success of business secretary Grace Groner with the supposedly bad breaks that befell business executive Richard Fuscone.

Groner lived a modest life, with a sturdy but quiet career. She reportedly bought $180 worth of her company’s stocks in the 1930s … and never sold them. When she passed away in 2010 at age 100, her net worth was $7 million, which she left to charity. Granted, she was lucky to select a successful investment, but we would suggest her true success was grounded in her steadfast investing.

In contrast, Fuscone is Harvard-educated and a former vice chairman of Merrill Lynch’s Latin American division. And yet, in 2010, he declared personal bankruptcy, reportedly stating, “I have been devastated by the financial crisis which came to a head in March 2008 … I currently have no income.”

We share Housel’s sentiments, when he says, “These stories fascinate me. There is no plausible scenario in which a 100-year-old country secretary could beat Tiger Woods at golf, or be better at brain surgery than a brain surgeon. But – fairly often – that same country secretary can out-finance a Wall Street titan. Money is strange like that.”

Enjoy this short (true) story by one of the great personal finance writers of our time. *No need to read the full report unless you really get inspired.

A professor set a large jar in front of her class of savvy business students and filled it with fist-sized rocks until it was full.

“Is the jar full?” she asked the class.

Most of the class nodded in approval. Then, she took out a bag of gravel, and dropped a handful of it into the jar until it slid into all the spaces between the big rocks. “Now is it full?” The class was starting to catch on. Several students said the jar wasn’t full yet.

“Well, let’s find out,” she said. The professor brought out a bucket of sand and poured it into the jar. With a few shakes, the sand filled the tiny crevices around the rocks and gravel.

“Is it full now?” she asked yet again. The class thought: What could possibly be smaller than sand? Sure enough, the professor took out a jug of water from behind her desk and poured it into the jar where it diffused through the rocks, gravel, and sand, filling the jar to the brim.

“Your life is like this jar,” she explained. “If you don’t put in your big rocks first, they’ll never fit around the little stuff.”

We did not write this story; it’s been around for years. We’ve heard it a hundred times or more from financial thought leader Larry Swedroe, and Matt Hall felt it was so powerful, he included it in his book Odds On.

If anything, the message becomes more relevant as each day passes. In 2019, it’s easier than ever to fill our proverbial jars with sand and water: shopping, entertainment, text messages, and so on. Meanwhile, there’s less and less room for our big rocks: family, community, education, financial freedom – the not-so-sexy yet foundational qualities of a life well-lived.

Our job at Hill Investment Group isn’t just to maximize the value of your investment portfolio. That’s part of it, but our greater job is to help you put your big rocks in place. All of them.

How’s your jar looking?

We’ve said it before and we’ll likely say it again: Investment risks and expected rewards are related, but disciplined diversification helps us reduce the risks.

Our friends at Dimensional Fund Advisors recently released an important report supporting this point.

In their report, they took a look at four sources of expected returns found in many evidence-based investment portfolios (market, size, value, and profitability).

Using U.S. stock market data stretching back more than 50 years, they found that, about half the time, one of the four premiums delivered negative returns for any rolling ten-year period across that time frame.

That sounds risky, doesn’t it? But consider this: Across the same time frame, at least one of the premiums delivered positive returns during every single 10-year rolling period. In fact, far more often than not, two of them delivered positive returns during each 10-year period. The premiums existed, they observed, but they “do not move in lockstep.”

Check out Dimensional’s report to see the data for yourself. It offers a strong, continued vote for depending on steadfast diversification across multiple risk premiums to help you manage your risks in pursuit of your expected rewards.