Numbers guide much of our daily lives. From the price of a gallon of gas to the cost of our morning coffee, numbers are solidly submerged in our collective consciousness. Numbers are absolute. Even though the cost of a gallon of milk may go up or go down, what the numbers involved mean stay static and absolute. Prices may fluctuate, but a dollar is still four quarters, ten dimes, twenty nickels or one hundred pennies (as unwieldy and impractical counting all of them out at the coffee shop cash register might be). Numbers are logical and predictable. Three times seven will always add up to twenty-one (a number that has much significance at the blackjack table and equal importance for college students looking to embrace their new-found adulthood with a pint or two at the local watering hole). Numbers are practical and unemotional. Numbers know no sympathy - just ask anyone who has ever gotten a costly ticket for exceeding a posted speed limit. Numbers are a lot of things but one thing they are certainly not: numbers are not people.
In the world of investment management, there is an oft-discussed idea that blindfolded monkeys throwing darts at pages of stock listings can select portfolios that will do just as well, if not better, than both the market and the average portfolio constructed by professional money managers. If this is true, why might it be the case?
As a parent and a financial advisor it has always been important to instill the value of financial knowledge and to encourage other parents to teach their children to understand the fundamentals of good financial decision making.
Unfortunately, lessons in money management can fall by the wayside and by the time kids are starting to make their own money choices they do not have the tools to avoid costly mistakes.
I think it is an enormous oversight that schools don’t even teach the basics such as how to pay bills or why interest rates matter. Sadly, we will not likely see a shift in the education system anytime soon so, it must be left up to parents and guardians to teach financial literacy to their children. Ultimately, it is you who will benefit from having a responsible grown up who doesn’t need to borrow money from you or live over the garage due to poor money choices.
Planning for retirement is a source of anxiety for many people. From the intricacies of the planning process to concerns about results, this time can be fraught with uncertainty. While many parts need to come together to make a cohesive and sustainable plan, the biggest fear most face is the fear of making mistakes.
Mistakes in a retirement plan can be costly in both time and money. While the monetary cost is the most easily visible, the cost in time – if retirement is close and there is scant time to make up lost ground – can also cause a fair amount of unease.
Although there is no absolute guarantee for a perfect, mistake free retirement plan, these mistakes – and their unintended consequences – can be minimized and managed--and, hopefully, bring about peace-of-mind during the retirement planning process. Here are some ideas for increasing inner harmony on the road to sound retirement planning.
“Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.”
--Robert Frost, excerpt from the Road Not Taken
In a recent article from Financial Advisor Magazine that identified the regrets many people have for not taking more risks in life. “Among the top regrets were: not following their dreams, not taking risks with their careers, not taking risks with their lives in general, and not being gutsy enough in the choices they made.”
What was reassuring about these findings is that many people vowed to fix these regrets by taking more risks with the time they have left. There is an optimism there that is unique to our time. People are living longer, way longer than we were even a few decades ago and with that comes opportunities to evolve and edit things about our lives that don’t make sense or don’t satisfy us regardless of our age or stage in life.
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