The prefrontal cortex is the CEO part of the brain. It is involved with personality, decision making, and moderating social behavior including impulse control and risk taking.

You may not be surprised to learn, therefore, that this structure matures late in life. One study found that the prefrontal cortex may continue maturing late into your 40s.

The brain of a teenager typically has a poorly developed prefrontal cortex—this is reflected in behaviors that you might have experienced yourself back in the day.

I know I look back and think about some of the things I did and wonder how I made it out alive.

It’s curious to me that it takes so long for this part of the brain to develop—after all… it’s where all the wisdom resides. Wouldn’t it be useful as a teenager?

Part of me thinks that prefrontal cortex development into our late thirties and early forties is designed to compensate for our relative physical decline.

In other words, we find other ways to be useful to the tribe since we can’t hunt or reproduce with the same efficiency.

The tribal elders have wisdom in the form of a well-developed prefrontal cortex and it gives the rest of the tribe a reason to keep them around rather then pushing them off a cliff.

Whatever the evolutionary purpose for this late development of wisdom in our lives, I can say with some certainty that I have felt that prefrontal phenomenon palpably in my own life.

I have become wiser in the last 10 years and I actually feel smarter today at 44 than I ever have in my life. And to be clear, I’m not sure if I could study with the same intensity that I did in 20 years ago in medical school and I’m not sure if my recall would be quite as acute.

When I say that I am smarter, I mean that in very broad terms. I see the world with far more clarity than I did in my 20s. I am a very different person.

For me, the most profound change in my thinking has been the recognition of traditional paradigms and conventional wisdom. It used to be the case that I never really questioned anything—it never occurred to me to do so.

These days, I like to examine my own belief systems and am not afraid to challenge them. That is very liberating.

It does take some courage to do so. Our belief systems are shaped throughout our life and are so deeply ingrained in us that sometimes, when we start doubting them, it feels like we are doing something wrong.

Of course belief systems permeate all facets of our life and Wealth Formula is a show about wealth so let me use a relevant example in the investing world.

I talk to accredited investors every day and I often hear them talk about being “conservative investors.”

What does conservative investing mean? Well, conventional wisdom has drilled it into us that conservative investing is to maximize your 401K or IRA and let a wealth advisor put you in a portfolio of mutual funds.

That is, after all, what we are taught is the conservative thing to do, right? But ask yourself the question, why is this conservative? 

Mutual funds have yielded an average of about 3 percent yield over the past 3 decades. With inflation moving at around 2 percent, that gives you about 1 percent real growth in your money every year. It would therefore take you about 72 years to double your money.

What makes that conservative?

Of course you could also just keep your money in the bank and make less than 1 percent. Is that conservative? Well, with inflation, you would then guarantee that you would lose money over time.

What makes that conservative?

Meanwhile, Wall Street has labelled real estate and other tangible investments as “alternative”. What comes to your mind when you think of “alternative”. Blue hair? Pierced body parts?

Indeed, the language is there for a purpose. It’s their to guide your thinking. After all, owning real estate and other tangible assets is what the richest families in the world have been doing for centuries—far before there was every an equity market like the New York Stock Exchange.

So why are we supposed to be scared of it? Why do wealth advisors, and your own family, tell you that you are doing something wrong when you start talking about investing in anything outside of Wall Street?

There is no good reason. It’s just conventional wisdom and it’s wrong. Your mature prefrontal cortex should recognize that.

My guest on Wealth formula Podcast this week is full of wisdom in the financial realm. He also started out as a dentist and, like me, has no formal financial training.

His name is Dr. David Phelps, DDS. He’s a smart guy and worth listening so don’t miss this episode!

David Phelps, D.D.S.

Shownotes:

[00:07] introduction

[18:21] buck introduces David Phelps

[19:59] David Phelps’ background

[25:03] The gap

[28:10] The accumulation theory

[32:20] How am I going to outlive my money

[35:42] Freedom blueprint

[42:02] Why is Wall Street considered “conservative investing”

[45:14] Freedom Founders

[51:12] learn more about David Phelps

[52:02] Outro