Five Financial Lessons From Charles Dickens

Since I’ve been on a Charles Dickens kick of late, I thought I would share with you some of my five favorite Charles Dickens quotes that have an economic angle, and share with you what they mean to me:

“Although Oliver had been brought up by philosophers, he was not theoretically acquainted with the beautiful axiom that self-preservation is the first law of nature.” –Dickens, Oliver Twist

The first law of charity is that we need to make sure that we ourselves become self-sufficient. Obligations should be viewed in ascending order: your first obligation is to your immediate nuclear family, your secondary obligation is to your extended family and close friends, then your local community, then your town, state, country, and so on. You don’t want to be one of those people who feels good about donating to the celebrity cause blasting on the television while ignoring the local hardships in your community. You don’t want to be giving money to your local church when you can’t afford to adequately feed and clothe your kid. And really, the overriding focus should be that you become a financial powerhouse yourself so that you can avoid to be charitable in assisting others, but when you are in the early stages of building wealth, you need to be a little bit selfish—you need to become a source of strength yourself before you let others siphon off your resources. You can’t reach your potential if you pre-emptively weaken yourself first.

“External heat and cold had little influence on Scrooge. No warmth could warm, no wintry weather chill him. No wind that blew was bitterer than he, no falling snow was more intent upon its purpose, no pelting rain less open to entreaty.” –Dickens, A Christmas Carol

Of course, this is the flip side of that Janus coin. If you are financially independent and have thousands of dollars in excess cash coming in, then you should start to feel an obligation to ramp up the generosity—helping the family member that is struggling due to job loss or unexpected costs with raising kids, donating to your church that is having trouble balancing its budget, and so on become much more important items on your personal financial totem pole. And, of course, if you are in the early stages of wealth creation, here is how you square the circle—you give your time, kindness, and intellectual generosity to others, but you do not give them your money. If you are not yet financially independent, then *you* are the top priority for your money. Be charitable with others in every other regard, but you are at a stage in your investing life when building strength is more important than allowing others to tap into that strength buildup, leaving you treading water.

“Some people laughed to see the alteration in him, but he let them laugh, and little heeded them… His own heart laughed: and that was quite enough for him.” –Dickens, A Christmas Carol

This reminds me of the Charlie Munger quote “if doing the right thing causes you a little bit of unpopularity with your peer network, then to hell with them.” The logic is that self-improvement and becoming the idealized version of ourselves is more important than playing it safe with our typecast personalities that our immediate social network expects. When people don’t achieve progress in their lives, it’s usually a result of fear or pride. Sometimes, that is internally based, and other times, that is the result of worrying about what other people think. If you can feel yourself getting better—trust that feeling—and treat the perplexion of others with amusement. The alternative is much worse—you play it safe and fall into a rut. A little bit of uncomfortability is a small price to pay for realizing self improvement.

“I never could have done what I have done without the habits of punctuality, order, and diligence, without the determination to concentrate myself on one subject at a time.” –Dickens, David Copperfield

On the short list of the most important character attributes for an investor to have, planning and preparation deserve a spot on the short list. If you mix planning with automatic investing, you are almost guaranteed to be in a better place each month than you were in before it began.

A plan might like look something like this:

(1)    Live a lifestyle that allows you to save $500 per month.

(2)    Commit $50 each month towards Exxon Mobil, Johnson & Johnson, and Procter & Gamble, which gets automatically debited from your account. You are guaranteeing that you are acquiring shares in some of the most powerful corporations on earth, which you will own more and more of each month—and, of course, more and more ownership translates into more and more dividends.

(3)    Use the remaining $350 per month to stockpile in $1,000 increments, so that every three months you get to make a new $1,000 value investment.

The specific numbers will vary from user to user, but a plan like that ensures that you are putting yourself in a position to invest, buying some of the highest-quality companies companies in the world on a highly regular basis, and setting aside the funds to make value investments. It’s guaranteed. It’s automatic. This kind of diligence and focus can make sure you have a lifestyle that guarantees the accumulation of wealth, and demonstrates one of the distinct advantages of living deliberately.

“Reflect on your present blessings, of which every man has many; not on your past misfortunes, of which all men have some.” -Dickens

Sometimes it’s important to remind yourself of the perspective that you’re coming from. The fact that you are in a position to even *think* about investing puts you in the top 0.01% of anybody who has ever lived. That’s why it is dumb to compare yourself to others—don’t even begin to play the “mine is bigger than yours” game with portfolio sizes—the guy with the $50,000 portfolio is in the same band of brothers with the guy who has the $500,000 portfolio because they are both among the luckiest people to have ever lived, financially speaking. We’re talking about degrees of the most affluent in history, once we enter the world of investing. There is no reason to feel disenchanted just because someone is richer than you—the key is to determine what the best version of yourself looks like, and then find a way to bridge that gap. The highest-quality people don’t let themselves get distracted by others.

Originally posted 2013-10-12 19:00:41.

Like this general content? Join The Conservative Income Investor on Patreon for discussion of specific stocks!

4 thoughts on “Five Financial Lessons From Charles Dickens

  1. AaronFunding says:

    Why pick those 3 stocks, Exxon mobile, Johnson and Johnson ad PG over the very many other dividend aristocrats?

    1. Waterbuffalo says:

      You could pick a few others, but I think his point is that you need to start somewhere – and those 3 are great core positions. Even among the dividend aristocrats, there are an elite few, and perhaps 10 or fewer stocks make up that elite class. By my count, all three of Tim's picks are in that group. Personally, my advice to a beginner would be KO, JNJ, and PG for a 3-position core, so not too far off from Tim's. (Although I do also own XOM, and it is part of my core of 9 stocks).

      The "elite" dividend aristocrats as I see them are: XOM, JNJ, PG, KO, MCD, CL and I would include V, which I believe will be a dividend aristocrat once it has been a public company long enough – and certainly elite by any measure. Pick any 3 of those first 6 names, and you have yourself a long term, sleep well at night, dividend generating core.

      1. Charles says:

        I just started with your 6 core plus WMT. Still waiting to add PEP and maybe GIS or IBM. Chose BAX as my first non core and boom down 6%! Lol

  2. Elvira Vasquez says:

    No kidding? Only yesterday I read a diametrically opposite information on this matter written by one of top-rated authors of Maybe, both articles are true to some point. But I’d like to figure out which one is more accurate. Could you please discover your topic on that website and compare to give me some more arguments in favor of your data?

Leave a Reply