Let's get clear about our goals around investing money, i.e., storing money for the future. Like squirrels who wisely stash acorns for the winter, we're wise to avoid consuming all of our money today, and instead storing some for a time when our acorn collecting ability is diminished by an illness, the tree house needs a major repair or we'd like to spend the winter on a tropical island.

This is the first idea of investing: good storage.  If you store your acorns poorly, they get moldy, just as money stored under the mattress is subject to the mold of inflation.  As time passes, your cash loses power, and the less it can actually purchase.

Second, you must also store your acorns in more than one place; if your entire stash is in the branch that falls off in a storm, it's going to be a long winter-so too for the investor who puts all their money into one precious stock that doesn't deliver or goes bust. 

The third idea of investing is where the magic comes in: compounded growth.  When done well, investing turns 5 acorns into 15, or even 50.  You can think of it as a squirrel either loaning out some acorns or investing in others' abilities to find acorns, then earning a reward for the risk inherent in these activities.  Even after 20 years as a financial advisor, it's still magical to me that $75,000, invested in a diversified portfolio, can grow to $1 million in 20 years.

The fourth idea is that whether you're working with one thousand dollars or one million, you want every dollar to do well, not just some of them.

Yet somehow, I and many of us have been conditioned to focus on how one small part of our storehouse grows - namely one stock, one mutual fund, one real estate investment. We think that if we hit the jackpot, we're successful, and if we missed investing in that supposedly-obvious "hot stock," we've failed. But it is a distraction to focus on one single part of the whole. This is our money madness again - irrational behavior based on distorted perceptions from childhood. It's like a kid with a baseball collection obsessively protecting the latest MVP's card while letting the others languish in a messy, neglected pile.

Here's the fifth idea: know the big picture when it comes to numbers.  I've asked the question, "How much did your entire portfolio grow over the last year?" hundreds and hundreds of times.  80% of the time, the answer is "I don't know." 10% of the time the answer is way off, and 10% of the time it's somewhere in the ballpark. But ask about that person's favorite stock, the one they think is going to hit big, and it's a totally different story; nevermind that it's the entire portfolio-not that single stock-that will have to fund all those things for which they're storing money...

Here's the antidote to this particular brand of money madness: let go of the conviction that you're going to get rich quick on one lucky break, and get back to the basics.  Store everything with care in diversified locations, and everything grows. It's truly as simple as that.

At the end of my Cure Money Madness talk last month, I had a great opportunity to dissect a common—though complex—money madness situation. On the last day, a 50 year-old man came up to the podium and said, “I’m not sure if I have money madness.” He went on to share that he hadn’t filed a tax return in almost a decade, not only to avoid taxes, but also to avoid the hassle of completing an administrative form.

After we talked about some numbers, he publicly confessed what he already suspected, and what I knew—that he wasn’t actually saving much money by not filing. Then, he blurted out, “I’ve also kept my income low all these years so I’d be below the IRS’ radar – too small a fish for them to fry…But now I’ve spent my small inheritance and am struggling to make ends meet.”

“OK,” I responded, “let’s get clear about what your money madness drives you to do. First, earn less money than you’re capable of earning. Second, reject work that would increase your net worth and refuse to ask for better compensation for the work you’re doing. Third, shirk your legal obligation to pay taxes.”

He agreed that this was a fair assessment, so we explored the money messages on which this behavior was built. Three important messages emerged.
1. The “system” is unfair, and a hassle, to boot.
2. You should get away with something if you can
3.Not paying taxes makes perfect sense, given #1 and #2.

Curing money madness begins with examining the costs of money madness. In this case, money madness locked him into making less than he needed to live, into doing uninteresting work that didn’t capitalize on his genius qualities and into a constant state of stress at the specter of being caught by the IRS.

Then, he had to accept the numbers we’d just looked at, and truly understand that while he might have avoided an end-of-the-year check to the IRS, what he avoided in earnings was far greater than any taxes could ever have been.

Next, he had to make the connection between not paying taxes and his self-confidence.  One consequence of the system he’d concocted was that he lived a smaller, less public, more limited professional life, which no doubt affected his personal life, too. His system both reinforced and created low self-esteem. He had to see that the whole thing was, for him, a way to avoid personal pain, yet a source of the very pain he was trying to avoid.

If you pay more, you get more.

That's the standard formula, the common wisdom. Buy the basic product for one price, the better-performing deluxe product with extra features for a higher price, and the super-deluxe wow-performance product with every possible bell and whistle for top dollar. More money equals more value, right?  I haven't found it so.

I bought a watch complete with electronic compass, ten alarms, and altimeter. After a few months, the altimeter still worked but the fixed time was correct only twice a day, and I needed to haul the operating manual around with me to figure out how to work the alarms. 

I upgraded from a boom box to a full stereo system and discovered that the antenna on the full system was inferior-full-system users are expected to be CD-listeners, not radio fans--and I couldn't hear my favorite FM station.

The interior-lighting salesperson sold us on a push-button, dimmable scene-programming system for our kitchen to replace the standard on/off switches. Well, yes, we could create many more moods with the scene lighting, but we couldn't stop the constant, maddening flickering. Until we replaced the fancy, cinematography-ready system with a more conventional one, our solution was to use the kitchen only while the sun was up.

At the clothing store, when I said I assumed the six-hundred-dollar suit would last longer than the three-hundred-dollar suit, the salesman introduced me to the facts of fashion. No, he said. Actually, because the six-hundred-dollar suit is made of finer material, it will wear out sooner. And since it's the latest style, it'll become obsolete earlier.

Yes, lunch at The Four Seasons tastes better than at any diner, my $400 blender does a phenomenal job making smoothies, and our $300 ceiling fan is a lot quieter than the $49 fan it replaced. But many times, adding new! and improved! features to a basically successful product seems only to compromise the product's integrity and undermine its original purpose.

It's certainly true for investment products.

A typical S&P Index fund-the investing world's "basic product"-usually costs about 0.3% per year or less; that's an annual expense of $30 for every $10,000 invested. The fund has no bells and whistles; it's just a lamp with a light bulb. It won't claim to protect you in a down market or shift all your money to the technology sector if that's where the "smart money" is going. You know exactly what you're getting: an average return of 11% per year by staying invested in a cross-section of the largest 500 U.S. companies.

But, wait, what if you increase your expenses to 1.5% per year, or $150 for every $10,000 invested, and try to do what academic studies show can't be done -that is, beat the market? The extra bucks will buy you the bells and whistles of lots of trading, racing around trying to time the market, rotating assets from one sector to another, or ditching the stock with which you've become disenchanted in favor of the new "hot pick." 

In so doing, of course, you actually increase the taxes you owe because of all the turnover. And so what if 80% of these active funds under-perform? You've got the dimmable scene-programming lighting design that is sexier than the basic product (i.e., the S&P index fund), but is it worth it? Put simply, no.

Think about it. At least five-times the extra money for less performance means less money for retirement. Excuse me, but I'll take the lower cost, no-frills investment and use some of the savings and extra performance for lighting I can see by-and for the occasional lunch at the Four Seasons...

A friend of a friend of a friend invited my wife and me to a fundraiser hosted by one of the world's most powerful women in her own home-and just like that, I found myself at Oprah's house.

Since childhood, my money madness has equated self-worth with net worth.  Conflating self-worth with net worth has driven much of my dysfunctional behavior around money, including my knee-jerk reaction to disconnect from those I perceive to have more or less than I do. I experience that separation not just in my mind and spirit, but in my body; I may greet someone wealthier with the appearance of ease and equality, but my body tells me I'm inferior-tight shoulders, a nervous stomach and a quickened pulse are the typical sensations. No doubt the other person feels nervous, closed-off energy on some level.

My money monster also made me assume that others would behave the same way-that is, if someone perceived me as richer then they were, they would distance themselves from me as a matter of course.  In order to stave off this distancing, I kept my money private for a long time. Ironically, the isolation led to less joy and, as I've connected more to the world without hiding my money, I've felt more joy, more inclusion and less separation from others.

Which brings us to Oprah. Here she is, a billionaire, a powerhouse, a woman of deep self-awareness with a profound sense of social-responsibility and connection, opening her home and encouraging all of her guests to get real and get open about their wealth.  

Oprah's honest, embracing energy powerfully reminded me that whether you're a billionaire or in debt, the more you can connect with others through money conversations, philanthropy, giving and receiving, the more we all feel a sense of inclusion and joy. Money does not have to be a force of divisiveness; it can be a tool for change and intimacy - if we're willing to use it.

What! You love money? Yes, I do - but I love it because of the good it can do if it is treated with respect and managed correctly. I love to help people transform their relationship to money, and  in doing so, empower them to change the world.  I love being on a mission to Cure Money Madness!