By Brent Pritchard

When your time comes, I hope you get the chance to work with a living legend in your industry like the opportunity my former colleagues and I had.

There were lots of things that made the man special. One was his intuition. “Never make a loan to a person who drives a red sports car.” Why? Because they’ll never make the first payment: true story. He not only had a tremendous amount of smarts but a smile that made people smile and stories that made them belly laugh. Two that come to mind are the “Elk Meat” story and the one about the borrower who chose not to lay into him because the man thought he had brought his son, a coworker who shared the same last name but no relation, to the face-to-face meeting.

A woman, who will remain nameless, who works as a waitress has learned to watch out when a child orders the filet. Why? Chaos will ensue: you’re likely to get “talked up to.” Whether the meat is red or not on the inside, this gets to the same point: learn from past experiences.

A red flag in finance is that many aspiring finance professionals, dare I say most, don’t know how to manipulate the investment yield. (You can insert “interest rate” if you haven’t yet been enlightened by the fact that a non-interest bearing asset can also potentially compound.)

Here’s an excerpt from my book Would Your Boomerang Return? What Birds, Hurdlers, and Boomerangs Can Teach Us About the Time Value of Money (2023):

Before Clayton John made the trek to Cedar Rapids, Iowa, financial calculator in hand, responding to the job posting he saw in the Wall Street Journal and would later get, he was a high school math teacher in Albert City, Iowa.

I love this story for a lot of reasons. First and foremost, it showcases an important sequence that many people outright ignore. First comes the math, then comes the finance.

What do you estimate for the true quarterly investment yield based on an effective annual interest rate of 10.3813% with monthly compounding? (The answer isn’t 2.5953% and it’s definitely not 3.4604%, nor is it 2.6178% and it’s definitely not 3.5056%. It’s 2.5%.)

Brent Pritchard is an author and college finance educator with over two decades of industry experience and cofounder of Boxholm Press, LLC, a family-owned-and-operated publishing company providing educational content, products, and services. He pioneers an innovative and approachable new way of learning and teaching the Time Value of Money as well as thought leadership in other business topics. His most recent book is Would Your Boomerang Return? You can contact him on his website here.