Often, we tell you to stay the course, or no action is the best action. But successful financial planning is about following some principles that are fairly simple, but not always so easy to follow! That’s why we remind you whenever we get the chance; we earn our keep by keeping your eye on the plan.
Start with a plan.
By a plan, we mean where you are now. Where do you want to be? When do you want to get there? And how much can you add between now and then? Or how much income do you need to draw between now and then? We encourage you to spend more time on your plan for the future than planning your next vacation.
This blog came to us as Rhonda remembered things her grandmother used to say about money. Look after your pennies and the dollars will take care of themselves. Or another favorite, those folks have more money than sense. (When Rhonda was young she thought her grandmother was saying “cents.”) And of course, a penny saved is a penny earned.
The destination is YOUR dream and YOUR goal. There is no trophy! But there is satisfaction. We will keep your eye on the plan, not on a prize!
Diversification is Important.
True diversification means never making a killing from an investment, but never getting killed by one idea, either. Different investments meet different objectives at different times. Never will they all move in one direction at the same time! And that’s a good thing.
And as Granny 2 used to say, don’t put all your eggs in one basket.
Think Long Term.
How long is long term? You should never make an investment that you don’t intend to leave alone for at least five years. Five years has tended to be a “normal” market cycle. Remember though, “NORMAL” is only a setting on the washer!
But another way of looking at long- term, if your plan is for the rest of your life, then long-term could be 40 days or 40 years. Most of us don’t have an expiration date stamped on the bottom of our foot. When investing, history has shown that the good days tend to take care of the bad ones. Time in the market is more important than timing the market. And measuring your plan’s success daily is like measuring the distance from here to California with a ruler. Anything worth having is worth waiting for, working for, and earning.
Faith in the Future.
Many of us could have never imagined the progress we would see in our lifetimes. Someone is sitting in the shade because someone else planted a seed. We own pieces of businesses when we invest in stocks, businesses that provide products that are important to our lives.
Who’d of thought many of us would pay more a vehicle than we did our first home?
Act based on your plan, not the headlines, your favorite brother-in-law, your neighbor, a candidate, your favorite internet or broadcast guru.
You know we all tend to hear headlines and immediately think the sky is falling. I should do something, anything. The grass is greener on the other side. This time is different. We know we want to buy low and sell high. But the urgency in an information-saturated world makes us react and do the opposite. But that guy on the internet was right last time. Remember, stopped watches are right twice a day!
One point we don’t count as a principle, but maybe we should. While there are people who do it themselves, and there are those who follow friends, or newsletters, most folks benefit from having a guide. (Dare we say, sometimes you get what you pay for? Or if it sounds too good to be true, it might be?)
We think our clients benefit from having someone whose cooler head will prevail when their hearts and emotions want to react. We want to be your guide to turning your dreams and goals into reality! Let us help you remember the simple things…and to make them easier. (And maybe some of these quips might help you when the noise gets too loud.)