Okay, Let's Do This

The holidays are nearly done and it’s time to attack 2012.  Recent news suggests an improving U.S. economy.  European leaders are starting to act like they know things need fixing.  Lessons of austerity from 2008 and the recession are still fresh, but businesses are starting to put their cash to use and hire more, advertise more, and order more.  Home buyers see homes more affordable than at any time in recent history. 

Family time has regained its position as a higher priority in American lives.  Swings from the extremes to the middle in American politics seem to be gaining popularity.  More realistic expectations of the investment markets are changing behaviors and decisions. 

In other words, it feels like the time is ripe for focusing on the goals that support a happier life.  Your optimism + your hard work + bettering environmental conditions = better results.  So dream a bit bigger and work a bit harder toward the things you care most about in 2012. 

Wealth Management Philosophy

Beyond the previous post titled 10 Things I Think I Think About Money, what is my foundational belief in how to effectively manage wealth? 

1.       Have a plan and be intentional.  You will not be an accidental millionaire.

2.       Cash is king.  Be prepared to be liquid.

3.       Be happy with your career. You’ll need (and want) to keep earning an income beyond historically traditional retirement ages.

4.       Manage your tax liabilities.  They are your single biggest “expense”.

5.       Use your money to do things that make you happy.  Incorporate some fun into your financial plan.

6.       Diversify.  Not just in asset allocation, but in managers, styles, risks, etc.

7.       Manage downside risk.  Seeking shiny gold stars for one-year investment performance may not be a good long-term strategy.

8.       Give money away.  Sharing your fortunes with others makes you happier and makes you care more about your own success so that you can keep giving.

9.       Actively manage money.  Don’t stare at the stock market ticker, but conduct periodic how-are-we-doing reviews to be sure you are on top of things.

10.   Don’t spend more than you earn. 

Ownership vs. Stewardship

What if your stopped thinking that your money belonged to you?  What if you were just the steward of your good fortune instead of the owner of your possessions?  And what if you were judged by what you did with your wealth instead of measuring the abundance of your accumulation? 

Some folks freak out at the thought.  There are plenty of people who consider all financial things “theirs”, whether they be opportunities, possessions, or decisions.  Financial planning for them is about control and maintaining a tight grip and their appetite for planning usually hinges on how to keep what they have and how to get more of what they want.  

But other folks find it liberating to believe they are merely stewards of their wealth.  It gives them a perspective that in the end, it’s what we do with, and how we use our gifts that measure our financial success.  It gives them motivation to care for their wealth better, share more of their success with others, and be more intentional with not only their money, but also with their time and relationships.  Financial planning for them is about pursuing experiences and defining a purpose for their accumulation and wealth preservation.  These folks carry less debt, give more to charities, travel more, and rate their financial happiness level higher.

The tools and tactical steps used in the financial planning process don’t differ whether you’re a “keeper” or a “sharer”.  And it isn’t true to say that one group performs better financially than the other.  But if you loosen your grip on your money and think of it as a tool with which to satisfy a list of things and experiences you want to accomplish, I can pretty much guarantee you’ll be happier about why you’re planning and managing your finances.

Less Worry | More Happy. "What's that all about?"

Less Worry | More Happy is a financial pursuit.

1.      Reduce financial uncertainty

2.      Increase financial control and discretion

3.      Increase the size, number, and scope of financial options

4.      Provide the worldly means for achieving a desired lifestyle

5.      Turn focus toward relationships and life experiences

6.      Be grateful for blessings and give hilariously

Imagine if you achieved those six goals.  Isn’t that more inclusive than “beating an index”, or “saving money on car insurance”, or “retiring at 65”?  Think bigger about what it is you are really shooting for and determine whether your current financial goals are pursuing a movement or just targeting a mark. 

Investment Philosophy - Investment Advice Is Not A Commodity

I was reminded  this week while reviewing a new client’s previous portfolio of the distinct and different philosophies present in the investment advice business.  This is good news for people like me who depend on the fact that I’m not the same as every other advisor, allowing me to be different and attract clients who identify with what I provide.  This is also good news for investors who wonder whether there is any real difference between investing on their own, or trying to figure if there’s a difference between advisors who compete for their business.  I assure you that the difference is there, and is significant. 

The longer I work in this industry, the less I believe that there is one objective “right” way to invest.  I used to think that the philosophies and gurus I believed in were “right”, but I think I was getting that confused with “comfortable”.  I used to think that investing was merely an objective science, but I think now that it starts first with an artistic approach and personal identification of values and importance.  This change in perspective has lead me to better appreciate different styles while at the same time increasing the confidence I feel about my own investing style, advice, and philosophy.

I am very sensitive to diversification.  I like to diversify strategies between financial goals and build different portfolios for different pursuits.  I like to diversify asset holdings across uncorrelated vehicles.  I like to diversify asset managers across different styles (based, again, on their own investment philosophies).  I like to diversify tax treatment strategies between investments at risk.  I like to diversify the reporting and analysis of economic and financial market performance.  I like the complexity of diversification across as many aspects of investing as possible and use it as a guiding principle in delivering my investment advice. 

Other advisors have different philosophies and you have your own philosophy, whether or not you know it.  The key to a successful investing-advisory relationship is to determine whether the person you hire to advise you on investments (even if that person is you) has a philosophy you can appreciate and identify with.  Confidence of conviction is important. 

Headlines Yesterday On A Popular Financial Website

Copper Warning: Metal's Slide Is 'Pricing In Global Recession'

Why 'Operation Twist' Likely Won't Do Much for Jobs

Global Meltdown: Investors Dumping Nearly Everything

Could France's Banking Problem Come to US Shores?

Special Report, "Markets In Turmoil."

US Is Already in Double-Dip Recession: George Soros

Or Is It So Bad, It’s a Depression?

What Do You Do When All Else Fails?

I do not believe that ignorance is bliss but I do believe in overstimulation, especially when I think there can be some confusion between information and media salesmanship.  It isn’t that I don’t believe or respect an author’s opinion or research, but I do believe that there’s a definite bias toward selling bad news.

For example, in the article Could France's Banking Problem Come to US Shores? , the author’s main point is actually “America's banks are much healthier than Europe's, so no.”  But on a day when the Dow dropped 391 points I think they thought the title they wound up choosing would be more titillating, get more hits, and thus help them sell more advertising.  Just my suspicion. 

There are enough fundamental and rational reasons why the nation’s and the world’s economies and governments have a lot of work to do that I don’t think the media needs to sell us much more than just the facts. 

All I’m saying is be careful not to judge things and reach conclusions based on updated-every-5-minutes headlines.  Instead, dig deep, take your time, ask questions, and consider the source of all your information and advice (including that which comes from here)

Your Happiness Matters To Others

Perhaps in times of stress or in great unhappiness you’ve sat by yourself and asked, “What am I supposed to do?”  Or maybe in a broader sense you’ve thought about how you spend your time and money and wondered if you’re living the kind of life that you should be.  If your career is in a rut, or your time feels out of your control, or your relationships are not as meaningful, or your finances aren’t in line with how you’d like them have you ever questioned, “Is this it?”

Whether you have struggles with your career, your relationships, or your finances, I think they might all be related to not intentionally doing what you know you can do.  Lack of intentionality is more often than not the root cause for the biggest disappointments.  But this is fixable!  Who are you not to be happy?  Who is your family not to feel that they get the best of you?  Who is the giver of your gifts and talents not to expect that you steward them to good use? 

So plan for greater happiness for yourself and for others by  going after what you know you should.  What are you really good at?  What do you do that brings other people happiness?  What are the ways in which you act that deserve cloning and copying by the rest of us?  Who could use more of you?  What do you do that pleases you most? 

I suspect that there are coworkers, friends, and family members who will benefit from you being happier.  You doing more of what you know you should and what you know you can is eagerly awaited by people who rely on you.  Your financial plan, too, is also waiting for you to build it based on how it can support your life and happiness.  Money works best when it provides the worldly means of supporting your happiness, not the other way around. 

Your new direction toward less worry and greater happiness can start by matching up more forcefully what makes you happy  and what others need from you.

 

“The place God calls you to is the place where your deep gladness and the world’s deep hunger meet”
(Frederick Buechner, Wishful Thinking: A Seeker’s ABC, San Francisco: Harper San Francisco, 1993, page 119)..

Choosing Success

Your financial success and independence is not up to fate or chance.  Chances are virtually nil that you’ll wake up one day and find that all of your financial dreams have come true.  That is truly a fantasy.

You don’t lose weight while you sleep.  Your credit cards don’t pay themselves off.  You don’t show up for work one day to find that your crummy job has been replaced by a good one.  But if you choose to exercise 4 times a week, and if you choose to have your credit cards paid off in six months, and if you choose to find new job which you’ll love, I bet you’ll get every one of those things that you want. 

So chances are very good that your financial goals will be realized if you recognize that success first stems from making a choice to move from “here” to “there”.  Once you choose what you want, you’ll be able to choose to make the sacrifices necessary, and choose to follow the habits that carry you to success.

If you have elements of your financial life that you want more success with, start first by making a list of what you choose to pursue:

               I want a job that pays 20% more

               I want my credit cards paid off in one year

               I want to feel happier about my finances

               I want to take a trip to Hawaii

Now you’re ready to build the plan of how to get there.

Small Bites, Not Big Gulps

One of my tendencies is to try and solve problems and struggles with an all-inclusive plan to fix everything.  This often inhibits me from being as effective or as efficient as I could be because big solutions are hard to start, hard to monitor, hard to identify progress, but easy to abandon and lose focus.

Instead, I’m trying to do a better job of choosing small, sometimes even daily, steps toward a larger goal so that I’m incrementally moving in the direction that I want to go.  I think the motivation of constant motion is more rewarding and adds up to greater accomplishment than the delay that’s inherent with successful long-term plans.

So perhaps you have a financial goal or a financial stress you’re  wanting to overcome.  Having the end-result goal is great, but I’m learning more and more how important it is to build into it very small and attainable goals that add up to the result that you want.

For example, let’s say you want to save $12,000 for XYZ.  You could plan to save $500 per month for two years, but if that’s your focus how specifically are you going to find the $500? .  Instead, try a plan that focuses on specific behaviors like this:

·        Cut out one latte per day

·        Reduce cable plan to only channels I actually watch

·        Ride the bus two days per week to save on gas and parking

·        Bring my own lunch twice per week

·        Sell online at least one item I never use that’s just cluttering up my house

·        Choose a restaurant from the coupon book or coupon websites

·        Buy one fewer clothing item per month

·        Skip the beer and the hot dog at the game and park just a tad farther away and walk

By my calculations, that’s close enough for most people to get to the $500/mo goal.  And since the bites are small and arguably not overly sacrificial because they are spread out among different aspects of daily living, the feeling and impact of those specific behaviors probably won’t leave you feeling discouraged or totally void of enjoyment.  Also, being able to see immediate results of progressing toward your goal will reinforce your enthusiasm for your choices and actions.

The point is, if you know where you want to go begin by developing a series of very small and incremental steps that will support your greater objective.

What Makes A Good Financial Goal?

When discussing someone’s financial goals I’m often asked, “is that a good goal”?  I really think what they’re asking me is whether I think their goal is realistic.  Not just whether their on track but whether or not their goal is attainable and worthy of effort and sacrifice. 

A big believer in specific goal setting, I think it is important to have financial goals that present certain characteristics:

1.      You have to really want it.  Not just think you want it, but be passionate and competitive about it.

2.      You have to believe that you can do it.  You may want to start your own consulting business, but if you don’t think you can do it, then don’t include it as a goal.  Maybe instead, set a goal of getting a job at a prestigious consulting firm.

3.      You have to be able to picture the result of achieving your goal as having a lasting positive impact in your life.  If buying a second home means you’d feel more misery taking care of it and worrying about it, then don’t set this as a goal.

4.      You have to be able to build steps and achieve benchmarks along the way.  You are less likely to achieve the goal of buying a house if your goal is to buy a house.  Instead, set a series of goals related to buying a house like:

a.      Place $500 per month in a money market account until we have $20,000 saved toward a down payment.

b.      Have cars paid off in 30 months by adding $50 per month to our principal payment. 

c.      Accept the cash bonus from work instead of the sales-incentive trip to Aruba and save the cash in the money market account for a down payment.

If you have a financial goal that has these characteristics, now you can focus on building the “how-to” steps necessary to get there.

Jean Chatzky's 10 Commandments of Financial Happiness

I like Ms. Chatzky’s financial books and commentary because a) she’s learned through personal experience and effort, b) she speaks sensibly, c) she renders thoughts related to a comprehensive and balanced approach to financial living, and d) I believe in what she says.  In her book The Ten Commandments of Financial Happiness Jean analyzes the results of a unique survey in which she questioned 1,500 Americans about their financial attitudes and behaviors.  The list of her commandments:

1.      Get organized

2.      Pay bills as they come in rather than letting them accumulate

3.      Keep tabs on your cash

4.      Save at least 5 percent of your income

5.      Protect your family and your income

6.      Minimize credit-card debt

7.      Do unto others and budget volunteerism and charitable contributions

8.      Spend sensibly

9.      Start working toward your goals

10.   Communicate

The key to success isn’t identifying these 10, it’s being focused and disciplined enough to live them.  And I believe that if you want to do well with all of these, start with #10 first.  Get your spouse, your partner, your financial advisor on board first and then commandments 1-9 get a lot easier to follow successfully.

Confidence that DOWN means that UP is coming

For anyone who has read the book Liar’s Poker by Michael Lewis you will recognize this passage quoting a poetic muse called Memoirs of a Trader written by a man who made a living in the equities department of Solomon Brothers in the 1980s.  In it, the trader describes the hopes and experiences that ride on the rise and fall of the stock market:

The market, he had learned, was like the sea, to be respected and feared.  You sail on its smooth surface on a placid mid-summer day;  you were borne along by a favoring breeze; took a pleasant swim in its waters, and basked in the rays of the sun.  Or you lolled in quiet currents and dozed.  A cold gust of wind brought you to, sharply – clouds gathered, the sun had gone – there were flashes of lightning and peals of thunder; the ocean was whipped into seething waves; your fragile craft was tossed about by heavy seas that broke over its sides.  Half the crew was swept overboard…you were washed upon the shore…naked and exhausted you sank upon the beach, thankful for life itself…

This doesn’t sound at first like an optimistic enough quote to put in a Less Worry | More Happy blog, but I’d argue that it does prove the reason to maintain a positive outlook.  First of all, this wasn’t written in 2008 or 2011, but in the early 1980s.  It could also have been written in the early 1990s, or the early-mid 1970s, or 1987, or the early 2000s.  The point is, we’ve seen many moments where we feel like the sky is falling and that all of our savings held in the stock market have vanished forever.  But we’re still here and in order to have momentous crashes we must also by definition have to have moments of high points from which to drop.  The bears need the bulls and vice versa.

This up and down nature of the market is inherent and nearly a law.  We may not like the big downturns but we accept them and the risks associated in order to feel like our savings will grow over a long period of time at a rate better than other alternatives.  If we failed to have that hope in the long term success of the market then we’d be doing something else with our money. 

A diversified and customized portfolio that incorporates our objectives and our risk tolerance, combined with our understanding that markets are not guaranteed except for the guarantee that returns and prices are in constant flux is still, for most people, a place to be.  We may feel that the reasons for recent ups and downs are different this time.  We may feel that the time spent in a “down” is longer than normal this time.  And we may feel that the prospect for a long-lasting “up” is too far into the future to see.  But we believe that we’ve chosen wisely and that hourly movements of the market that have happened inside this last two-week time frame doesn’t speak for our faith in the long-term viability of where we have placed our savings.  

Market Volatility & Your Investments

When your car starts making a weird noise don’t you turn your radio down and intently listen for the noise?  Don’t you become fixated on hearing the new rattle or sputter and ask, “what was that”?  It seems like when there’s worry about your car all you can think about is what will happen if your engine blows up and you’re left stranded on the side of the road.

But even if we’re listening for and worrying about that noise, most of us don’t immediately drive straight to the car dealer and sell our car.  No, we keep an ear on things and try to determine what’s causing the noise, analyze the reasons for the noise, and interpret the noise to decide whether it’s just a pebble in the tires or a sign of truly serious mechanical failure.

Stock market volatility and daily changes to our portfolio account values should be treated in much the same way.  There are experts, media pundits, co-workers, neighbors, and financial advisors all willing to lend their thoughts as to why the markets are moving the way they are and to render opinions about what the economic noise is all about.  Some will relate the recent volatility to an overreaction to the political handing of what is still a sound standing of the US economy and financial system.  Others will related the recent volatility to a prediction of future problems and another economic slowdown.

But much like taking time to determine whether your car needs to be sold or just have its tires inflated, it is important to take some time to really interpret what is happening in the stock market before making a rash decision.  We do not believe this can be done correctly based on only a few days of activity, especially when there does not appear to be any consensus as to its “cause”.

We believe that most of the activity in the market is due to speculation and a discomfort with uncertainty and not a reaction to any strong indications or fundamental results.  The recent string of economic news has centered on political wrangling, a lack of desire to make important decisions, and a total “miss” on comprehending the consequences of a short-term focus than it has on capacity, capability, and reality.  We think that making decisions based on the former group is dangerous if done too rashly. 

So our advice is to take some time to make conscious, careful, and intentional decisions.  We still believe in devising an investment strategy that takes into account an appropriate time horizon and asset allocation even in the face of reactive ups and downs in the market.  In other words, unless you’ve changed we don’t think your investments should change.

Step 1 To Greater Financial Happiness

Most financial happiness comes from a combination of meeting your obligations, providing a level of security for your family, sharing some of your success with others, and having an overall sense of control over your current and future financial position.  Each one of these elements of financial happiness can be both learned and designed.  If you plan for them and create behaviors that support them, you will find that financial happiness is a talent and an ability that you can develop. 

Step 1:  know thyself.

I don’t like financial plans that jump right in to determining IRA contribution amounts or choosing an asset allocation model if it doesn’t first have some benchmarking for where you currently are on the continuum of financial happiness.  There are many different ways to get at this, but I like to start with these and then build from there:

1.      What about your finances do you spend the most time thinking about?

2.      Which of your financial decisions are you most proud?

3.      Which of your financial decisions do you wish you could do over or change?

4.      What roadblocks do you feel are keeping you from feeling more in control and happy?

5.      My attitude about money in my life is __________________________

6.      I make financial decisions in my life as-if my attitude about money is ______

Now we’re getting somewhere.  I find that people who really care about answering these with deep insight are the ones most likely to make the behavioral changes that lead to an improvement in their financial happiness. 

I think most people wouldn’t find this step the hardest part of gaining financial happiness (the hardest part is actually doing the right things habitually – I’ll write about that later), but I believe that without this first step and the related elements of getting to know who you are financially, you undermine the efficiency of any other efforts you undertake.

10 Things I Think I Think About Money

1.       I think most of us believe we want it in order to provide for our loved ones.

2.       I think we often spend it in ways that aren’t truly in line with “providing”.

3.       I think we don’t appreciate how rare our money “problems” are in contrast to how most of the world’s population lives.

4.       I think we fail to understand the true cost to our health, attention, and relationships of what it takes to earn it.

5.       I think most people do not believe that they control their level of happiness about it.

6.       I think we don’t want to admit our ignorance about how the financial world really works.

7.       I think we are too quick to believe people who make money selling their ideas about it.

8.       I think most of us expect the wrong things when we invest it.

9.       I think we build lives around it rather than the other way around.

10.   I think when managed, valued, and understood correctly, it can be an important part in living a happier life.

I Was Eavesdropping

I probably shouldn’t admit this, but I had a chance while at a coffee shop to eavesdrop on a sales pitch delivered by another investment advisor to a prospective client and I took it. After the requisite 10 minutes of get-to-know-you small talk with the color brochure placed conspicuously on the corner of the table, the conversation segued into the “what are you looking for in the management of your investments?” question.

Unfortunately, I think the client gave the most common, but the most wrong answer: “You know, I really am not an investment guy. I just want once or twice a year to have an update delivered to me that shows all of my investments on one page. Maybe showing me how much they are up or down, and showing a track record of growth over time. And since I’m conservative I’d really just like something that keeps up with the market.”

The only person who loves that reply is the advisor. How hard is it to deliver a summary of investment performance on a single sheet of paper? How hard is it to print color graphs and stick fancy logos on them? How hard is it to send an update and then put the client file on the shelf for another six months? How hard is it to try and “match the market”? Not very hard at all and I guarantee that anyone with even six months experience in this business can deliver what the client said he wanted.

A better answer by the client would have been this: “I am looking for my investment plan to directly relate to the happiness I’d like to feel about money right now. I am looking for my investment plan to be tied to my goals of life experience, to my sense of financial responsibility, and to the relationships with people whom I care about.  I am looking for my investment plan to help me make daily decisions about my money and my priorities. I am looking for my financial reports to be translatable from numbers into qualitative improvements in the quality of my life. I am looking for a gain to my financial knowledge, not just information.”

Seeking expertise on the execution of an investment plan is wise. Leaving open to interpretation what you want and expect from the advisor you hire is not.

Common Character Traits of the Rich

I read an article today about research done on common personality traits of the financially “successful”.  They were listed as:

1.       A propensity to plan correlated with a higher than average accumulation of wealth regardless of annual income.

2.       Financial literacy regardless of math confidence correlated with a higher accumulation of wealth.

3.       Having feelings of powerlessness ( as reported by the study’s subjects) correlated with a lower accumulation of wealth.

4.       Conscientiousness and emotional stability were most directly linked to a greater accumulation of wealth.

Each of the four traits above demonstrate the benefit of living with purpose and intention.  Whether you want to be happier at work, or do better with your retirement saving, or be a better spouse, you’d better pay attention to the list above because not in the top 4 is “cross your fingers”.

I often meet people extremely frustrated with their financial situation and I see just as many people with low incomes report frustration as I do people with high incomes.  In fact, those with higher incomes tend to report even more frustration because they feel they’ve let their good opportunity “slip away”.  Conversely, I get to meet people who feel extremely confident in their financial position regardless of how much they make.  When I ask them why they feel comfort and contentment almost without exception they say “because we’re living just as we’d planned”.  Perfect!

People ask me all the time for financial “tips” and for ways to save more for retirement, for college, etc.  And while in the middle of everyone’s unique financial plan there lies a lot of important details that require examination and hard work, I believe the universal “tip” for financial wellness is to create a long-term habit of doing everything on purpose.  Purposefully manage your career.  Purposefully be the parent you want to be.  Purposefully stay healthy.  Do those things and your finances cannot escape the power of your control if you choose to exhibit it.

So look at the list above again and think about how planning, how educating yourself with the realities of financial engineering, how feeling empowered, and how awareness and empathy of the world around you can make you more capable of accumulating and acquiring the kind of life (both financially and otherwise) that you want. 

Tax Management In Your Investment Portfolio

Many people are once again starting to see some of their mutual funds pass along taxable income.  Such is the “benefit” of recent improvements in the returns of various markets.  Some of us haven’t seen taxable income from our investments for awhile so it’s time again to review what it means to exercise good tax management in an investment portfolio not already in a tax-deferred arrangement (IRA, 401(k), etc).

Right now if your investments are held in a taxable account you might be exposed to paying tax regardless of whether or not you took money out of your account.  This could be a bummer because now you might actually have to take money out in order to pay the tax , reducing the amount left in the account to grow into the future.

So good tax management tries to avoid or reduce this problem by doing three things:

1.       Timing of portfolio changes.  Good tax management models pick appropriate times to buy/sell securities so that it doesn’t lead to a gain.  For example, bad tax management might rebalance your portfolio on a quarterly basis no matter what, possibly triggering a gain to you and exposing you to tax.  Good tax management would say STOP with the rebalancing merely because it is the start of a new quarter if it would create an unnecessary tax liability.  Good tax management is more sensitive to timing the intricate interior changes to your portfolio. 

2.       Tax-lot activity.  Basically, tax-lot activity is a portfolio-management function that searches your entire portfolio to try and harvest any losses (which reduce your tax liability) to counter any taxes caused by growth.  This obviously requires very detailed awareness of all the elements of your portfolio on a regular (i.e. constant basis).  Good tax management follows a disciplined search for opportunistic offsets to tax liabilities.

3.       Choosing tax-advantaged vehicles.  Good tax management looks for acquiring underlying securities that might be less likely to create taxable gains.  Choosing stocks and funds that don’t pay dividends, that don’t produce realized capital gains, that aren’t subject to federal taxation, are examples of how to create a good tax-managed portfolio from the ground up.  Good tax management selects specific investments most likely to be tax-friendly.

The overall goal is to build the entire model around protecting your investments against tax without eroding the return performance of the portfolio.  Careful selection of the right asset managers who are specifically good at tax management is absolutely critical.  Like any specialty in any industry it takes years of proven performance to demonstrate a real talent.  You can’t just “wing it” when it comes to good long-term tax management.

Is My Passion Good Enough For You?

Investments and estate planning and tax management can be very boring.  I think I’ve got some skill and understanding in many different areas of financial planning and counsel, but it isn’t a passion.  But what IS a passion, and what has become a personally-transformative realization is that I am extremely passionate about not missing out on living the way you truly want to live.

Number one on nearly every list of excuses as to why people aren’t happy, or don’t pursue bucket-list experiences, or fight in their marriage, or put off spending time with their kids, or don’t take vacations, or don’t quit jobs that they hate is MONEY.  And I can't tell you how much I hate that.  No one on their deathbed ever says “I wish I would have worked more”.  No one ever says at the end of their life “I wish I was less giving, less adventurous, less caring, less friendly, less compassionate, less loving.”  A full life, a happy life requires that you have experiences and relationships that supersede any financial status or position.

So it would seem at first that money is enemy #1 but I don’t believe that.  What I think is enemy #1 are our expectations of what money means to us, can do for us, and the order in which we place it in our thinking about how we plan to live our life.  Living an intentional life just like you want and managing your money wisely can coexist.  In fact, I argue that they are co-dependent.

My “best” clients aren’t wealthy.  They occasionally struggle with unexpected expenses.  They worry about rising college tuitions.  They haven’t bought a new car in 7 years.  But they have the best vacation photos of their kids taken over the years.  They both love their jobs.  They give a substantial amount of money away to their church and non-profits that they like.  They have a list of experiences and adventures a mile long.  They don’t work late or on the weekends.  They have a huge collection of friends.  They are active and athletic.  They smile a lot.

Not everyone wants a financial advisor who wants to focus first on being happy.  Not everyone wants a financial advisor telling them to think about being a nevertiree.  Not everyone wants a financial advisor suggesting they find a non-profit who will take more of their money.  Not everyone wants a financial advisor who advocates carrying around a bucket list.  But I want clients who do and who expect me to help them manage their finances so that they can focus on living more like they intend.

What Is Different About Investing Today?

Everything.

Are you…

·         Actively managing assets vs. just buying and forgetting?

·         Choosing the best investment managers?

·         Following bad trends too long?  Not following good trends early enough?

·         Tracking your investments with your goals?

Do better.

·         Look for better tax-management opportunities.

·         Find missing asset classes that fit your allocation profile.

·         Question unknown/unclear fees and expenses in your portfolio.

·         Rid your portfolio of redundancy, overlap & inefficiency.

·         Stop following trends too early or too late.

Why Not You? The Best Jobs On The Planet

I was talking to a friend about the Money Magazine article that rated the top 10 companies to work for.  He was kind of exasperated that he never had anything close to a single experience that some of the employees at these 10 firms have on a regular basis.  I’ve included the link to the online article below, but here’s a short list of some of what the “best” companies provide their employees:

·         Adoption benefits (time, money, and job security)

·         Telecommuting options to allow for oversees living in order to volunteer in impoverished areas

·         4-year college financial aid (loans & scholarships)

·         On-site childcare

·         Paid time off for volunteering and community involvement

·         Adventure trips

·         Self-designed/created jobs

If you read the article, notice how many employees comment about their employers supporting and encouraging the elusive work-life balance.  Notice how many employers promote life experiences and doing “what’s right”.  Notice how many employers freely heap on the personal responsibility and authority to every level in their company.  Notice that not a single employee commented on their level of pay.  Notice that not a single employee commented on their love of the actual product provided by their employer. 

Instead, each employee who raved about their employer felt appreciated and a personal connection with their peers and their management.  People want to work.  I’m convinced of that.  But we complain about our jobs when we feel no connection to the people that we work with/for and when the job doesn't feel like it is of our own design and intention. 

I’ve said before that I find it sad that most people will spend 40 years working in jobs that don’t give them a charge, just a paycheck.  40 years is a long time to not be happy about how you spend the majority of your day.  So you have three choices to make things better:

1.       Go search for a job at a place that excites you

2.       Create for yourself the exciting environment at the job you currently have

3.       Start your own business and run it how you want

http://money.cnn.com/galleries/2011/pf/jobs/1101/gallery.best_companies_employees.fortune/index.html

Kiva.org Microloan Repayment Update - This Works!

Sol Y Estrellas Group
Grocery Store, Mexico

51% repaid

 

 

 

 

Rose Wanjiru Njuguna
General Store, Kenya

16% repaid

 

 

 

 

Magdalena Agsunod's Group
General Store, Philippines

79% repaid

 

 

 

 

Check out their stories on our earlier blog posts at:

http://wallfinancial.blogspot.com/2010/11/in-september-i-posted-on-powerful.html

 

http://wallfinancial.blogspot.com/2010/09/sharing-our-blessings-thru-finance.html

 

Effort, Postive Attitude, Indomitable Spirit

It can be a challenge to consistently maintain the amount of energy that’s necessary to live the way you want.  How many diets fall by the wayside?  Or plans to exercise?  Or plans to live within a budget?  Or putting more money into your 401(k)?  Or working at creating a better career? 

Great ideas and plans can be easy to start, but difficult to maintain.  If you think about all aspects of your life, you probably have many different goals for betterment and improvement.  Most want closer relationships, more financial happiness, a greater sense of importance, a stronger faith, more free time, etc.  The hard part is the work that it takes to get there and the motivation to keep working at it no matter what.

So try this: borrow or invent a mantra or philosophy for success that you believe in and write that down where you see it every day.  There are lots of them out there from which to choose if you can’t figure out a way to express your own.  Friends of mine at my martial arts school will recognize this one: 100% effort, positive attitude, indomitable spirit. 

Once you write it down somewhere where you see it all the time, it will remind you what it will take for you to direct your own success.  I promise you that this constant reminder will help you make better everyday/little decisions which will add up to the habits that build the life that you want.  If you do this and it doesn't work for you, send me a note and tell me - you'll be the first.

We all need encouragement and guidance and the best of both comes from within ourselves.  So commit yourself to what you believe, remind yourself of it, expect yourself to comply, and watch how much closer you get to living how you believe.

What's Next

I have no crystal ball, so take everything I say as simple musings about what is possible, but I think the foreseeable future will present us with the following conditions that will affect our financial decision making:

·         Information will be easy to get, true knowledge will not be.

·         Changes in policy (or even the anticipation of changes) will affect the business climate.

·         Market changes will be faster, steeper, and more subject to overreaction.

·         Asset performances may not follow longest-term historical norms.

·         Historically divergent asset classes will have moments of high correlation.

So I’m advocating financial consumers do the following:

·         Pursue market intelligence and insight, not just data.

·         Truly understand the benefit of micromanaging diversification.

·         Believe in the benefits of oversight, access, and due diligence.

·         Don’t simply “buy and forget”.

·         Maintain rigorous discipline.