Financial independence buys you the most valuable asset on the planet: Freedom. The freedom to spend your money and more importantly, your time, however you see fit. Still, reaching financial independence requires more than mere investing. While some books try to tell you what think about investing. Cosmo DeStefano’s new book, Wealth Your Way, teaches you how to think about growing wealth and it’s filled with real life examples of the pitfalls you might encounter and strategies to avoid them.

As with most things in life, the more carefully you plan for financial independence, even with course corrections along the way, the less you’ll need to worry about the outcome. The book aims to help you live your best life today with the satisfaction and comfort of knowing your financial future is in good hands, your own.

Hey listeners, my name is Drew Applebaum and I’m excited to be here today with Cosmo DeStefano, author of Wealth Your Way: A Simple Path to Financial Freedom. Cosmo, thank you for joining, welcome to The Author Hour Podcast.

Cosmo DeStefano: I’m glad to be here, Drew. Thanks for having me.

Drew Appelbaum: Cosmo, help us kick off the podcast. Can you give us a brief rundown of your professional background?

Cosmo DeStefano: Sure, so for about 34 years I was a CPA and tax consultant with one of the largest professional services firms in the world, Price Waterhouse Coopers. You might not be familiar with the firm but you might recognize us as the folks that count the Oscar ballots for the Academy Awards.

You know, throughout my professional career, I was focused on working with institutional clients across various industries including financial services, real estate, high tech among others and over those years, I worked with hundreds of different companies.

I also work with some of the high-net-worth owners and operators of those businesses and I met a lot of very successful and fascinating men and women over my 34-year career and I’ll tell you, given my passion for personal finance, that topic worked its way into a lot of conversations with these people and as I like to say, I graduated from this very satisfying career back in the fall of 2019 to pursue the next phase of life.

The Importance of Financial Independence

Drew Appelbaum: Why was now the time to share the stories in the book? Was this, you know, because you had a lot of free time in your hands recently, you moved on to the next phase? Did you have an inspiring moment, an “Aha” moment or did enough people say, “Hey, you need to stop telling me this, you need to tell the world in a book?”

Cosmo DeStefano: It’s a great question, Drew, and I think you did a pretty good job of summing it up for me but I actually never really set out to write a book. It’s been a bit of an evolution, I really simply start it out wanting I teach my own two children about personal finances, right? 

I’m passionate about it and I wanted my kids to have a bit of a leg up if you will, so to speak. I found that those conversations quickly expanded to my extended family and then friends and then business associates and all of a sudden, I found myself writing periodic emails to that group discussing various financial topic. And all of a sudden, along with everybody else, you know, COVID-19 slammed us shut and put a real cramp in our time and travel plans so I started writing more extensively.

And those emails started getting distributed to hundreds of people and they would forward them on to other people and through that process, several of the readers suggest that I put my thoughts in one place and that’s quite frankly, when the book idea was born and given the shutdown, I did find myself with a lot of extra time, so I spent the last two years getting my thoughts out of my head and written down.

I would say that my simple wish for all those reading this book is that they learn planning for money matters can enhance your life’s journey and maybe the lessons in the book and the stories that I tell as you say, can help people avoid a few missteps along the way.

Drew Appelbaum: Well, kudos to you for accomplishing something besides just watching all these Netflix specials that have come out in the last few —

Cosmo DeStefano: Which I did that too.

Drew Appelbaum: It’s a balance, right? When you started writing those emails to friends and family and then eventually turning that into the book. Again, even though you’ve had three decades in the finance field, did you find that you just by reexamining some of these topics came to any breakthroughs, or learnings or did you pivot in any way for a belief you had before you started writing and then after?

Cosmo DeStefano: Yeah, it’s a really good question, Drew, because what I found was trying to take that three decades of experience and turn it into something that’s coherent that would be readable and relevant to the readers is a process. I really found that it took a lot of effort and it’s quite frankly why it took two years to boil down those three decades and put them into a format that I think people will find readable, relevant and they can personalize and internalize what I have to say and make it their own, which I think is critical when you’re talking about financial planning because if you can’t own the advice, you can’t make it your own, then it’s really going to be tough to follow it.

I try to write in a very conversational style so that people understand very easily what’s going on but I also back it up with hard data and hard facts. You know, it’s not only my opinion, it’s the advice and learnings over a three-decade career that I’ve pulled together and pulled from other sources and just try to put it in one place in a readable, enjoyable fashion.

Drew Appelbaum: You make a good saying in the book which was, “Everybody knows how to get fit and everybody knows about the gym but you actually have to go to the gym and work out to see the benefits.” It’s not just reading about it, it’s actually taking all these new facts and bring into your daily life but actually — you know, you mentioned that this all started with talking to your family and so, the fundamental question is, why don’t most people have a solid financial planning foundation, even the most well-schooled folks seemed know nothing about managing money?

Cosmo DeStefano: Yeah, it’s kind of sad but in this country in particular, financial literacy isn’t really taught, at least not in the public school systems and it’s — even though the life lessons that everybody needs to deal with, people are left to their own devices to sort it out, right? 

Highly intelligent people that have phenomenally successful careers might still struggle with personal finance because it’s not something that is taught to them, brought to them early on or if it is, it’s brought to them in an anecdotal fashion without hard facts and hard data to help back it up and explain what’s going on. 

I think it’s a bit of a real struggle for people to get their heads around it and the second piece of that I would say is, financial planning for the future can seem very distant and not have a lot of emotional relevance as supposed to the here and now, right?

People talk about instant gratification, wanting to spend money today because it makes them feel good or they’re looking for something today, tomorrow, that future, which could be decades away just doesn’t carry the emotional weight that today carries and it’s really tough to get focused and plan for something that could be 20, 30, 40 years off and I think people struggle with that mightily.

Drew Appelbaum: You say that the goal for most people is to achieve that financial freedom and that financial independence. Can we define that? What does it really mean to you and is it actually have a different meaning for different people?

Cosmo DeStefano: Financial independence I think in its most technical sense boils down to getting to a point where your investment portfolio can provide the monthly cash flow you need to live on without having to expend your human capital, i.e your labor to generate income, right? To earn a wage.

But I think it gets much broader than that and gets much more personal than that when you think about what you’re going to do with that independence. I like to say that financial independence buys you the most valuable asset on this planet, which is freedom. Freedom to spend your time and your money as you see fit, whether that’s spending more time with family and friends, traveling the world, volunteering somewhere, starting a business, you might have had a lifelong passion that you never had the time or the financial resources to pursue, now you do.

So the first step is getting to the point where you have the financial independence that allows you that freedom to then go pursue the things, that pursuits that make you happy and bring you joy in life and that is a very personal decision.

PCR: Plan, Course Correct, and Repeat

Drew Appelbaum: You know I’m glad you brought that up because you know, you say in the book, “Where do you start on this journey?” and you start with figuring out the end and should always have the end in mind and that you need to define your own financial goal first and move on. What factors should folks be keeping in mind when they are deciding that end goal?

Cosmo DeStefano: Great question and goals are critical importance, whether we’re talking about financial plans or any other kind of plan for that matter. Think about a boat captain that’s setting out on a course, they have to chart their course through the waters before they ever leave the dock, right? They know where that destination is and they chart a course to get there. 

Same is true with financial planning. If you don’t know where you’re going, it’s really tough to design a plan to get you there. So coming up with those personal goals that are specific as you can be and early on in your career, it’s tough to have very specific [goals] about retirement but start to think about retirement and as you progress, you adjust and change those goals.

I like to tell people, remember the acronym PCR: Plan, Course Correct, and Repeat, right? Slay out a plan know that your goals will change, they will inevitably change. Nobody knows what’s going to happen in 10, 20, 30 years because life just happens, right? Things happen that you can’t see, the future is unknown and unknowable. 

So what’s going to happen in the future? I don’t know but let me start laying out some plans now, some goals now, I’ll work towards those and as life happens, I’ll course correct, make changes, just like the ship, the captain of a ship would do if weather conditions deteriorated rapidly.

Today, you lay out your goals, you start moving towards those goals and then as life happens and unfolds, you make course corrections along the way. Plan, course correct and repeat.

Drew Appelbaum: So, for these course corrections, how often do these plans and projections, how long should you wait until you alter? Is this something where you should be absolutely freaked out after a month if a goal isn’t hit or do you give it six months or six years? How often should you be checking in to see if you need that course correction?

Cosmo DeStefano: Yeah, I like to tell people, look, this is a dynamic process. The planning process is dynamic, it’s a living, breathing process, it’s not a one-and-done process. But it’s also, shouldn’t consume your time, right? Again, as we started saying earlier, you want to live and enjoy your life while you are planning and trying to get ahead and get to financial independence. 

It shouldn’t be a very frequent process to review the plan, right? My opinion is, it’s somewhere maybe around once a year. You take a look at your plan, see where you are today and decide whether or not you got to course correct but this is not every month or every week or every quarter you need to tear it out and go through it step-by-step. It is devise a holistic plan and be comfortable that your plan is working and then periodically check. That periodic check-in should be around a year or so. 

Drew Appelbaum: You actually dive into compound interest in the book, which I think everybody knows is the tried and true method for really building wealth but it is so boring, so did you manage to in the book make a 20 and 30 year plan exciting? How could you really polish up compound interest for folks? 

Cosmo DeStefano: Yeah, I mean it is the juice that drives the plan but it is extremely boring to watch where it is almost like watching the paint dry. I try to get people and compound interest is a very powerful tool but it is not that intuitive and it’s tough to kind of wrap your head around it. I like to use some examples to get people thinking at least to see the power of compounding even if they don’t understand all the ins and outs. 

 So one of the examples I use is, I give people a hypothetical choice. Let’s say I will offer you the choice between receiving A. $100,000 a day each day for the next 30 straight days or B. I will give you a penny that doubles every day for 30 days, meaning you will get one penny on day one, two on day two, four on day three and so on. Which would you choose? 

People can pretty quickly understand that choice A, the $100,000 a day for 30 days you can do some simple math and come up to that’s about three, that is $3 million dollars a year. The second choice though is not so easily calculated in your head and let me give you a little bit of a hint. After 10 days you have just $5.12, so which do you choose? 

Well, if you chose the penny that doubles every day, after the first 30 days, you’d get to that 30 a day with almost $5.4 million. That is the power of compounding growth. 

Drew Appelbaum: I mean, that is well done, absolutely but for those other folks who are out there and are saying, “Hey, this is already too much. I am not comfortable with financing. I just can’t handle this,” what would you say to them if they said, “Okay, I think I am going to go out and hire a financial advisor”?

Cosmo DeStefano: Another great question and I think it is a very personal choice and what I try to do in the book is layout the considerations you need to think about in order to make the choice. You know, I used to be of the opinion that anything I can do myself, I shouldn’t pay anybody else to do it but I’ve kind of grown out of that belief. In the example I now use is, just because I can climb a two-story ladder and paint the exterior of my house doesn’t mean I should. 

Drew Appelbaum: Yeah. 

Cosmo DeStefano: When you come to make that decision about an advisor, I think it boils down to really understanding this, what is it you’re hiring the advisor to do and what are you paying that advisor to do it and how you’re getting your money’s worth? To put that into a little bit of perspective.

Again, I like to use a lot of data and I quote a few studies throughout the book and one of them is that if you hire an advisor that his only job, sole job, is to pick individual investments for you is a very high likelihood that they are going to struggle to add measurable value for you over the long term compared to you just investing in a low-cost broad-based index fund for example. 

Drew Appelbaum: Right. 

Cosmo DeStefano: But at the other end of the spectrum, you know, advisors can do much more than just make stock selection for you. They can be behavioral coaches, they can be mentors, they can help you with the planning process, they can help keep you from making impulsive or irrational mistakes. For example, helping you stick with your plan when the market’s crashing down all around you. 

Investment selection alone might not be a reason to pick an advisor but if they can help you stick with your plan and design your plan and stick with it, you know that behavioral coaching could very well be worth the fees you’ll have to pay them. 

Investing in the Long Term

Drew Appelbaum: What do you say to someone who thinks they really beat the market. They got that rush, they made that great stock call in the short term and they feel like they’re set and they get emotionally attached to some of their investments. How do you have that conversation with them to say, “Hey look, short term you’re great but long term you’re overexposed and you have yourself in some trouble. You need to potentially make some moves.” How do you break that emotional bond that some people have with their investments? 

Cosmo DeStefano: Yeah, it is interesting. I try not to break it. I try to compartmentalize it for them and what I mean by that is, beating the market is kind of a bit of a fool’s errand especially if you are trying to do it over the long term. Anybody can luckily maybe pick a winner but the chances of doing it successfully and consistently over 10, 20, 30 year period is almost non-existent. 

You know, it is a handful of professionals, the Warren Buffet’s of the world, the George Soros’s of the world that have had tremendous track records but the vast majority of the millions of other people out there are not going to be able to do it. What I tell them is if you still want to pursue it because you’d love the rush and you’d love the thrill of it, carve out a piece of your portfolio. What I like to say is no more than 10% of your portfolio and go try to do it. 

Enjoy it, if that’s what you like doing, go do it just don’t do it with the core of your portfolio. Don’t do it with the majority of your portfolio. Take 10% carve it out, go for it and if you lose it all, close the account and move on but don’t try to do that with your entire portfolio. 

Drew Appelbaum: Now, this book is coming out at a really interesting time as they were seemingly every other day is a high and a low in some part of the market. Do you see any strategies changing? Could you suggest — I know there is no investment advice here of course, the disclaimer — but do you see any changes that people have been taking or taking to protect themselves for maybe the next year in this turbulent market? 

Cosmo DeStefano: The short answer is no. I am big believer in being a long-term investor and I know a year sounds like a long period of time but in a 20, 30, 40-year plan it is really not and I really want people to focus on that long term. Put your money in the market, make sound investments like low-cost broad-based index funds and let it work for you and quite frankly, if you have that perspective and you continue to add monthly even when the market is seemingly going down and seemingly crashing, you’re going to find that most of your long term growth is going to come during those bare markets, those down markets. 

You’re just not going to realize it until after the bare market has passed, so take advantage of it. Takes intestinal fortitude to do it but again, that’s why you need a plan and if you stick to that plan when the market is going crazy around you, you’re going to come out the other side that much better for it. 

Drew Appelbaum: When a reader really digs in and they finish the book or if they are inspired midway through, what impact do you really hope it will have on a reader and are there any immediate steps that you’ll hope they’ll take with their own financial planning? 

Cosmo DeStefano: Yeah, what I think the impact will be is that they’ll understand the importance of planning for the future, planning for your retirement not just investing, right? Investing is a tool that you’ll use in your planning process but it is not the plan and learning how to focus on this more holistic view of the financial — of your financial future is really what the book is all about. 

How do I get to the point where I can enjoy my life, enjoy that money, spend that money after 30 years of accumulating wealth, figure out how to spend it and enjoy it, which is the whole reason you collected it in the first place, built it up in the first place. 

Drew Appelbaum: You also have a lot of resources in the book, you have done your research clearly. How do you pick some of those books to feature in the book? Is there any one that you would suggest that people dive into for additional information after reading your book? 

Cosmo DeStefano: Yeah, as I said, earlier on I really like, I am a big believer in learning that life’s journey is learning and learning never stops and so I have read as you point out 60, 70 or more books, countless blogs, articles, stories and I have drawn upon a lot of that and pulling together co-mingling that with my experiences over the last 30, 35 years to come up with the advice that’s in this book. 

I wanted to — you know, a lot of the materials that resonated with me as I formed my own opinions. I do put in the book because I don’t think there is any one book that has all the answers to all your questions. I don’t think any one book can actually do that and so what I like to do is as I go through each chapter, at the end of each chapter I will actually give one, two or three additional reference points for people to go take a look at. 

If a specific chapter happens to resonate with you for whatever reason, I will give you some more ideas about where to go to do a little deeper dive or get even more background in different perspectives. Learning should be a lifelong process, right? The accumulation of wisdom is clearly a lifelong process and I want people to go out there, find the materials and form their own opinions.

What I like to say is, I am trying to help people not to learn about — let me say it a little differently. I am trying to help people with how to think about personal finance not just what to think and I think seeing a bunch of different other sources and reading a bunch of other different materials will help you build your own collection of wisdom that you’re going to need on your life’s journey. 

Drew Appelbaum: Well, Cosmo, we just touched on the surface of the book here and there is so much more inside but I want to say that just writing a book to really help folks achieve their life goal of financial freedom is no small feat, so congratulations in getting it out there and being an author and having your book published. 

Cosmo DeStefano: Thank you very much, Drew. 

Drew Appelbaum: Cosmo, this has been a pleasure. I’m excited for people to check out the book. Everyone, the book is called, Wealth Your Way, and you could find it on Amazon. Cosmo, besides checking out the book, is there anywhere else where people can connect with you? 

Cosmo DeStefano: Sure, the best place would be to follow me on LinkedIn. 

Drew Appelbaum: All right. Well, Cosmo, I appreciate you coming on the show today and best of luck with your new book. 

Cosmo DeStefano: Thanks again for having me, Drew. Take care.