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The Algebra of Wealth by Scott Galloway

The Algebra of Wealth by Scott Galloway

Rating: 8/10

Date Read: June 26, 2024

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The Algebra of Wealth has four main components: Stoicism, Focus, Time, and Diversification.

  • Stoicism:

  • Focus:

    • Primarily about earning income.
    • Don’t “follow your passion”. Instead follow your talent.
    • Find something you’re good at and become great at it.
  • Time:

  • Diversification:

    • This part is very hard to properly summarize. There is just so much details and nuance that Scott goes into.
    • He goes into a lot of detail on different asset classes and financial and economic principles that will help you make choices regarding your finances and goals.

Key Advice:

  • Economic security is more about what you keep than what you earn.
  • Success often comes from persistence and the ability to move through failure.
  • Building a strong community and network is crucial for success.
  • Consider market dynamics when choosing a career path. Since we covered no “following your passion” it makes a lot of sense to choose you calling based on the market interest. For example, with the advancements in AI it might make sense to learn about that from the prism of your talents.
  • Invest in real estate when it aligns with your life stage. Buying a house is probably going to be the largest purchase in your life. It can be a great asset, but might not be the best investment if you are early in your career.
  • Convert income into capital and diversify investments. The difference being that income is something you earn and spend, while capital is something that works for you.
  • Be aware of and strategically plan for taxes.
  • Maintain a long-term perspective in wealth building.

My Thoughts

I loved this book.

It cuts through the bullshit and just states plain facts. Scott Galloway is master communicator.

There is no groundbreaking information here, just useful things for your life that you might have not considered or forgot about.


  • My first piece of advice is you should assume you are not Jay-Z, Ronald Read, or Warren Buffett. Each was an outlier, not just in talent but in good fortune. Less romanticized, but more common, are the frugal janitors and prudent investors whose early trajectory was more consistent than explosive. Outliers make for great inspiration … but lousy role models.

  • This is the first lesson in this book: economic security isn’t a function of what you earn but what you keep and knowing how much is enough for you. As the great philosopher Sheryl Crow once said, happiness isn’t “having what you want, it’s wanting what you’ve got.” It’s not about getting more … but ascertaining what you need and applying the right strategy to get you there, so you can focus on other things.

  • What drives you is your business. Find it, nurture it, and carry it with you.

  • The Algebra of Wealth has four components:

Stoicism is about living an intentional, temperate life in and out of work. It’s about saving money, for sure, but also developing strong character and connecting with a community. This stuff matters.

Focus is primarily about earning an income. As I discuss, income alone won’t make you wealthy, but it’s the necessary first step. And you’re going to need a decent amount of it. So we’ll help you plan and navigate a career and maximize the income it generates.

Time is your most important asset. It starts and ends with an understanding of the most powerful force in the universe: compound interest. We’ll share how to make it work for you. Time is the real currency, the one asset we’re all given at birth, and the foundation of wealth.

Diversification is our take on the traditional personal finance questions, a road map for making sound investment decisions and for being an educated participant in the financial marketplace.



  • The Stoics identified the four virtues: courage, wisdom, justice, and temperance. I believe these are the keys to resisting temptations—and to much more.

Courage is our persistence, what modern thinkers often term “grit.” We have courage when we do not let fear guide our actions: fear of poverty, fear of embarrassment, fear of failure. Instead, we are industrious, positive, and confident. Marketers are masters of exploiting our fears and insecurities. Courage is cheaper than Chanel, and it works better.

Wisdom, as described by Epictetus, is the ability “to identify and separate matters so that I can say clearly to myself which are external and not under my control, and which have to do with the choices I actually control.” Or as Annie Proulx put it in Brokeback Mountain: “If you can’t fix it, you gotta stand it.”

Justice is a commitment to the common good, a recognition that we are interdependent. The Stoic emperor Marcus Aurelius believed that justice was “the source of all other virtues.” When we act with justice we are honest, and we take the full consequences of our actions into account. We can’t build good habits alone, and the latter part of this chapter takes on the ways in which our character is in part a function of community.

Temperance is to me the most important virtue because it is the one most tested by modern culture. Capitalism is fueled by our lack of self-control, our obsession with status and consumption. And not just in the obvious sense of super-sized fries and luxury handbags. Western society encourages indulgence not only in spending but also in emotional outbursts, in victimizing, and victimhood. Temperance is the resistance—or at least the management—of all our indulgences.

  • This doesn’t mean never being angry—I get angry often, too often. Nor does it mean never being dismayed, frustrated, or ashamed. Those are normal human responses to setbacks and mistakes. The objective is to acknowledge the anger or the fear—or the greed—but not let it determine your behavior.


  • The great Roman Stoic Seneca wrote, “There is no enjoying the possession of anything valuable unless one has someone to share it with.”

  • You are never more vulnerable to a huge mistake than after a big win, when you begin to believe the falsehood that your success is all about you.

  • What I have found is that the most important attribute is, as Winston Churchill said, “a willingness to move through failure without losing your sense of enthusiasm.”

  • Don’t get me wrong, events matter—but our immediate perception of them is often exaggerated, reactive, emotional.

  • As I describe later in this chapter, getting input from others is crucial for making big decisions.


  • The most successful people I know generate a ton of value through their community, and they give even more back.

  • As you build up your career, build a kitchen cabinet of people who can elevate you but also ensure you’re grounded (see above: be honest with you). These should be people you trust, people who have your best interests in mind, and people who aren’t afraid to tell you when you’re being an ass. Your kitchen cabinet will be who you turn to when you need career advice, second opinions on both business and personal decisions, and generally people to bounce ideas off of.

  • Some of the most valuable advice I get isn’t about what to do but what not to do.

  • Stoic philosopher Epictetus put it this way: “Above all, keep a close watch on this—that you are never so tied to your former acquaintances and friends that you are pulled down to their level. If you don’t, you’ll be ruined… . You must choose whether to be loved by these friends and remain the same person, or to become a better person at the cost of those friends … if you try to have it both ways you will neither make progress nor keep what you once had.”



“If you want something done, give it to a busy person.”


  • If someone tells you to follow your passion, it means they’re already rich. And typically, they made their fortune in some unglamorous industry like iron ore smelting. Your mission is to find something you’re good at and apply the thousands of hours of grit and sacrifice necessary to become great at it. As you get there, the feeling of growth and your increasing mastery of your craft, along with the economic rewards, recognition, and camaraderie, will make you passionate about whatever “it” is. Nobody grows up saying, “I’m passionate about tax law,” but the best tax lawyers in the country are financially secure, have access to a broader selection of mates, and are—because they are so good at it—passionate about tax law. It’s unlikely you will ever be great at something you dislike doing, but mastery can lead to passion.

  • What a job looks like from the outside (or worse, on TV) is rarely what it’s like on the inside. That’s not to say it’s worse, just different.


  • Talent is anything you can do that others can’t or won’t.

  • It took me a lot of years and many false positives before I found my real talents (beyond soaking up pain). Note: I want to find my talent, but it takes time. So, stay patient and observant.

  • The best-known tool is Myers-Briggs. Using a battery of questions, Myers-Briggs maps your personality along four dimensions. I don’t think many people are surprised by their Myers-Briggs score, but the process of both answering the questions and reading the results is illuminating—go beyond the labels and read the capsule summaries of your four-letter category.

  • Another tool to consider is Gallup’s CliftonStrengths, which is more explicitly aimed at identifying talents. It identifies thirty-five strength areas and you take an assessment test to narrow that down to your top five.

  • look to your successes (and failures) and disarticulate the skills it took to pull them off. Rate yourself on each of those skills. Which drove your success or lack thereof? (Knowing what you are not good at is the other side of the self-awareness coin.)

  • If you have something you are passionate about, interrogate that relationship. What specifically do you enjoy about it? I bet it’s the aspect where your talent comes out. What else can you do with that talent?

  • We tend to downplay our own talents (while seeing other people’s more clearly) because we are so good at them. If something comes easily to us, then we don’t value it. Whereas when we see someone else do something that’s difficult for us, we are amazed at their talent. Most likely, they are observing something in us the same way.

  • The path to mastery in our talents mirrors great product design. Innovation is incremental. The key is to ship something and begin improving on it.


  • Market dynamics trump individual performance. (I realize how awful that sounds.) Someone of average talent at Google has done better over the past decade than someone great at General Motors. Especially early in your career, be thoughtful about the wave you are paddling into; any opportunity you have when you’re young to choose among different paths is a profound blessing.

  • Economic downturns are, in my view, the best time to start a business. I’ve started nine companies, and the only factor I can identify across the successful ones is that I started them in recessions.

  • With fewer and fewer exceptions, a skill that’s an accelerant in any career is the ability to communicate your ideas. It doesn’t need to be a natural talent, and it certainly can be learned. If there is one skill I will try to ensure my two boys have some command of by the time they enter the workforce, it won’t be computer science or Mandarin, but communications. Not the history of communications or linguistics, but how to express oneself in different mediums. I just bought my youngest an Insta360 camera, as he enjoys making videos, and I’ve been recording podcasts with my older son, who I task with writing and recording two- to three-minute segments where I interview him on a topic. Communicating is a mainly verbal facility, but don’t underestimate the importance of visual communication. Design is increasing in currency. It’s no accident the CEOs of Airbnb and Snap are graduates of The Rhode Island School of Design and Stanford’s Design School, respectively.

  • Entrepreneur is a synonym for salesperson, full stop. We sell our vision to investors, employees, and customers—at the beginning, vision is all there is.

  • A variation on the entrepreneurial career is building up a portfolio of rental properties. Buying houses or apartments, or commercial properties, such as small retail or self-storage, can be a lucrative career eventually. I came to this field late and skipped the lengthy process of starting small and adding to my portfolio by virtue of wealth and timing. I have been in start-ups, tech, hedge funds, and media. The best investments I have made are in real estate.

  • A decent strategy for economic security is to buy a home that needs fixing up, spend two years living in it while improving it (thoughtfully), then sell it (shielding up to $500,000 [for married couples] in gains from taxation), and do so again. Wash/rinse/repeat. Expand your capital base, your skill set, and your network, then move on to more than one house at time. This is not a no-brainer; you need to understand the local market, be disciplined in your approach, and have a feel for what types of improvements would have the greatest ROI. Also, you’ll need to be able to manage vendors, and you’ll do far better if you are handy yourself. This is not a desktop investment strategy.


  • Get to a City, Go to the Office. Cities are fun, interesting, and social. You will meet people from backgrounds you’ve never imagined, with views on life that will change your own.

  • Desire is necessary, not sufficient.

  • If You Can’t Fix It, You Have to Stand It

  • Success is the best thing. Failing fast is the next best thing.

  • So every few years I brought them an offer from another university and was transparent: “This is what my market value is, I’d like to stay, and I ask that you match it.” They did. Note: No negativity, just plain facts.

  • Be Loyal to People, Not Companies

  • Asking for advice is one of the most powerful bonding things you can do in the workplace. It’s an expression of trust—that’s why it’s intimidating. But trust builds trust and deepens relationships. Seek counsel, and your mentor will be invested in your success.

  • Mike Bloomberg once said, “I have always had a policy: If it’s a friend and they get a promotion, I don’t bother to call them; I’ll see them sometime and make a joke about it. If they get fired, I want to go out to dinner with them that night. And I want to do it in a public place where everybody can see me. Because I remember when I got fired from Salomon Brothers—I can tell you every single person that called me. That meant something. When I was made a partner? I have no recollection of that whatsoever.”


  • Interests outside work aren’t just enjoyable, they are essential to short-term happiness and long-term satisfaction. But they are also a distraction from your focus, so be thoughtful about what you pursue and let go of pastimes that no longer suit you.



  • Technology is an enabler, but time management is a skill that transcends technology. Being good with money means being good with time.

  • Money is fungible, and you are saving it so you can use it, not to make the green numbers go ever upward.



“Success doesn’t come from timing the market, it comes from time in the market.”


  • The bulk of economic activity is conducted by companies not included in these indexes, and no single measure can capture as complex a concept as the economy. Think of the stock market as a dog on a leash, and the economy as the person holding the leash. Over the course of a walk, they both end up in the same place. But the dog (market) is going to zig back and forth quite a bit and send out a lot of false signals about what direction the walk is taking.


  • You want to develop an intuitive understanding of interest rates and tax deductions before you step up to buy your first house.

  • if you’re raising capital for your start-up, it’s not enough to know your product, your market, and your strategy. You need to understand the investor’s point of view, why they are in the room, what they want from you, and what you can get from them: valuation, dilution, governance, liquidity preference, etc.

  • for first-time and low- to middle-income buyers, and you may be able to withdraw some (not a lot) of capital from retirement accounts like IRAs and 401(k)s penalty free to put toward your down payment.

  • If you are disciplined and detail oriented, handy and/or comfortable dealing with contractors, tough enough to negotiate with tenants and enforce your agreements, and have deep knowledge and contacts in a regional market and, above all, have the time to do it right, seriously consider buying investment properties to rent or resell. Start small, grow incrementally. Note: Where can I learn about this?


  • Note: Tooth, no penalty for early withdrawal

  • Between retirement plans and other vehicles, you need to be thinking about your income as something you can slide around in time—take it when your marginal tax rates are low, defer it when they are high. In your peak earning years, deferral is usually your objective, but the right answer for you in any given year may change. The objective is to minimize your taxes over your lifetime, not in any specific year. That said, taxes you pay early in your career are more expensive than those you pay later because of the opportunity cost associated with not investing that money.


  • Convert your income into capital. Capital is money put to work, creating value. Investing is providing capital in exchange for a share of that value. Wealth is achieved through investing, not income alone.

  • Diversify to maximize returns, not upside. Your objective is to generate steady, long-term gains so that compound interest can work its power. This means diversifying your capital into different investments rather than concentrating it all on the one you think will give the highest return.

  • Buy a home when it’s the right time in your life. Real estate is the emperor of asset classes, and owning a home is the way most people invest in real estate. It’s forced savings, an investment you get value from every day, and can be the anchor of your portfolio. But an anchor is no good when you want to set sail. Home ownership is a life-stage decision first, an investment decision second.

◾ Be aware of taxes. The largest fee of them all, taxation can significantly alter your investment returns. You don’t understand an investment unless you understand the tax implications.

◾ Time your taxes. Investing through a traditional IRA or 401(k) boosts your returns by delaying taxation, potentially for decades. Investing through a Roth version, on the other hand, takes the tax hit now in exchange for tax-free income in the future. The right choice for you depends on your current and expected circumstances.



  • Find something you’re good at that people will pay you for and go hard, really hard, at it. Spend less than you make so you can deploy a platoon, then a division, then an army of capital that fights for you and your loved ones while you sleep. Diversify so you can endure the unknown that surrounds us. And have a long-term perspective: embrace the wisdom to recognize time will go faster than you think.


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