Realistic Expectations

The animal species called human? Isn’t it interesting how we react? The emotions that we let control are financial decisions, let control our friendships, our faith and the actions we take. How can we as animals be so emotional, so driven to take action that makes us feel better even if not prudent or wise.

With interest I recently watched as a client who recently engaged with me in the first three months decided the following:
1. Decided to retire years earlier than when we first spoke. (Whether they could afford it or not).
2. This means that we are not going to be able to save as much as we planned. (Yet they still expect the same results).
3. They decided they had to be aggressive because they cannot afford to be the appropriate risk tolerance that fit their psyche or that they were comfortable with. Otherwise they would not have any chance to meet their goals. (Do we understand what risk means?)
4. They expected 15% return. (Maybe we should go to Las Vegas and play craps as an investment tool).
5. They would not discuss spending less, retiring later or saving more even though the likelihood of long-term investments returning 15% consistently is almost nil. (Whatever happened to being prudent and systematic about our processes?)

So how does a rational person come to a conclusion that we should walk away from planning and prudence. Doing what Wall Street wants, pretending that we can predict, time and outsmart the market. Is this rational? No. Will this probably lead to financial success? Almost positively will not!

See I think we feel that the world owes us retirement, freedom the ability to do whatever we want……. why? 80 years ago nobody retired, they died. Retirement is a new social phenomenon. It is not owed. It is not God-given. It is something that we have marketed as the American dream in recent years. The majority of people in the world do not get to retire why do we as Americans think it is our birthright. Is it possible? Yes. But we have to work for it. We have to plan. We have to start saving early, consistently and have a long-term focus so that we can retire. Yet so many people get to retirement and have not saved enough, did not control their spending and find themselves not able to do what they want.

The biggest ingredient to being happy financially is to learn to be happy with what you have. If you always want more, want to retire earlier than you can, compare yourself to others what is the likelihood you will be happy? The best way to accumulate wealth is to be happy with what you are and what you have. Otherwise we get into a cycle of spending and buying because we feel that that will make us happy. This leads to being a Moneyholic!

Have a plan; be happy with what you are or what you have attained. We’ve all been born with different financial gifts, opportunities and rewards. Some of these we have created but ultimately happiness is about what’s important in life not what money can do and the unrealistic dreams that come from focusing on money goals rather than purpose in life.

Sincerely,
Wayne von Borstel, CLU, ChFC, CFP®, MSFS
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

The Importance of Planning

It is with interest that I see people that have invested in the IPO Facebook surprised that there was risk. What is investing? Is it the buying of one stock, gambling on the future of that company and the regulations that govern it, the competition that is unknown, and the price of the stock that is more controlled by unknown than known facts? Is this what you’re building your financial future on?

Don’t we need to build our financial future on solid ground? I think we need a plan or to be systematic. I think we need an investment strategy that we believe in, not one that we gamble with. I think we need a portfolio that is diversified, allocated and has low correlation that puts a strong strategy in place rather than the emotion and dream of quick riches.

Financial pornography put out by the news media, Wall Street and those that gain from your imprudent actions based on advice from someone that does not know you, your circumstances nor your dreams is not likely to lead to financial success. Financial success is born from having a plan. Financial success has a gestation period that takes patience and an understanding of the process of investing and prudent financial planning. Keep in mind that no financial strategy can assure a profit or protect against a loss.

Can you get rich out of an IPO? Yes. Can you get rich out of buying a lottery ticket? Yes. Does that mean that either one of these are prudent investment strategies to solve a lifetime of imprudent financial decisions. Now, many of you are successful and just get caught up in the emotion of the time. But, we need to stay true to our plan and the process that is dictated by our goals and the prudence of good planning.

Sincerely,

Wayne von Borstel, CLU, ChFC, CFP®, MSFS

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Are you Prepared?

Thunder storms, lightning, rain and wind….. maybe some hail. This is a part of summer and warmer weather. Now depending on whether you are traveling, farming, just living or maybe even on vacation you will react to the thunder storm differently. But no matter your circumstance we need to be unemotional and systematic about how we react and what we do.

If we are standing under a tree maybe we should not. I hear a rumor that getting hit by lighting is not a good thing. If we are a wheat farmer maybe we should have some insurance for hail…… before the storm comes. If in the pool maybe we should get out! If outside maybe we should go inside. It does no good to worry, fret or get emotional and crazy.

Yet when the storm in the markets come we act like it will never pass, that we have to do crazy things. The insurance we buy for investments is the plan we have in place. We have created the “The Vision to Wealth Process” tm to deal with this. This is our insurance that when the storm comes all we have to do is go inside and be thoughtful about how we adjust and react and the storm will blow over. So every financial decision you make to spend, save, invest or give money away either gets you closer or farther from this nirvana of planning. Train yourself and the ones you love that every time we spend, save, invest or give wealth away… we should ask ourselves these 3 questions:

1. Am I doing this because I am emotional, or not
2. Is this getting me farther from my plan, or not
3. Is this increasing the risk of failure in my plan, or not

If any of these answers are yes, STOP… do not pass go! Re-adjust your decision process and make sure we are on the right plan working towards meeting our goals, dreams and desires long term. Assuming you are on track to financial success, the next time you have the news on or read the front page article trying to get you to be hysterical,…remember, we are ok and we have planned for this. Have a great day and sleep well.

Sincerely,

Wayne von Borstel, CLU, ChFC, CFP®, MSFS

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.