Unfortunately, we sometimes have conversations with prospective clients that we can’t help. If someone just wants to maximize investment returns, we can’t help. Focusing only on maximizing returns is really a fleeting, ephemeral aspiration that has very little to do with sustaining your longer-term financial future. Outsmarting the market is not necessary to be a successful investor. We can help individuals that are investing for some specific future purpose. Otherwise, it’s just stacking up Benjamins.
We have found from long experience that the weaker the purpose for investing, the more focused clients are on short-term market ups and downs. Conversely, the stronger the purpose for investing, the greater the ability to stay calm and focus on the future.
A Weak Strategy for Retirement
Even more pointed, individuals without goals are usually poor savers because unlimited emotional wants can easily soak up all available financial resources. Individuals nearing retirement sometimes think a strategy seeking to maximize investment returns will somehow make up for years of undersaving. It won’t work.
Saving Now for Spending Later
With few exceptions, our clients tend to be natural savers. Being a saver is an essential condition for having a successful long-term advisory relationship. How much you need to save is an important question to consider and while it varies, the amount you need is likely is much higher than you expect. By time you reach your 50’s, somewhere north of 20 or 25% of income is probably in the range.
The consequences of not saving enough aren’t pretty. Ultimately the lack of sufficient financial resources translates into a declining lifestyle as you move into retirement.
What you want your future to look like and the path that takes you there is what’s most important. There is no substitute for saving and then investing those savings for a purpose. Constantly trying to maximize returns is fool’s gold...it’s shiny but essentially worthless for your longer-term personal purpose.
The appropriate level of risk for your portfolio should tie directly to your future goals. You can’t eliminate risk but it’s much easier to take risk knowing that it’s for a longer- term purpose.
Investors need leadership. They want to be able to discuss their financial life in a trusted environment where they can obtain impartial guidance, vision, and experience. Most brokers, insurance salespeople, and others calling themselves “wealth managers” simply can’t provide that atmosphere. Start there. Ready for a real conversation?