Our central philosophy on investing is that the most important determinant of one’s lifetime investment returns is one’s own behavior.
However, when most people hear that I am a retirement income planner or financial planner, they begin to discuss how the current markets are doing or ask my opinion on a particular stock or mutual fund. However, I, like most competent financial planners, do not deal in forecasting short-term market directions or predicting quarterly stock movements.
The media and stock brokers have incorrectly convinced the public into believing that successful investing involves market forecasting or predicting which stocks will lead the pack. It does not.
To illustrate the fallacy of their methods, I use the following analogy. A personal physical trainer does not talk about one piece of equipment or another as the key to success. Instead, success is derived from developing a plan that uses multiple exercises and pieces of equipment to achieve your desired goal.
The personal trainer knows that it will not matter to your physical health if you used the treadmill over the stationary bike to become being physically fit. This also applies to your financial health. It is the disciplined and continuous following of the exercise plan that will end up determining your physical health. This approach is the same for me when dealing with my clients’ financial health.
As a financial planner, I also know that it is not a particular investment that will determine if you reach your goals.
The key to financial health is to develop a plan to achieve success “on purpose” by determining where you are now and establishing a plan to get you where you want to be.
This approach uses the long term knowledge of the markets to benefit clients just as the knowledge of physical training leads to success physical health. For most people, it will be their behavior during the market spikes and market plunges that will end up determining how they fare.
So while I enjoy speaking about the investment options, I realize that it will ultimately be my coaching and guiding of clients through the emotional swings that occur – the euphoria in the market increases and the despair and anxiety that are all too real during market declines that will determine the success or failures. It is having the plan and then guiding them to continue to do the correct things and avoid the incorrect ones that will propel them to success.
So work with a financial coach who will provide you not just with the initial investments but also the guidance on an ongoing basis to give you the confidence that you will need to continue with the disciplined and patient approach to persist in working toward your financial goals just as your physical trainer does with your physical health. Do not spend time with a financial planner who believes success comes from a superior “treadmill”.
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