What NOT To Do When Things Aren’t Going Our Way Show 66

On Labor Day I ran the Reedy River 10k with my buddy Greg. I’m glad I committed to run it because I was dreading it! It’s hard to back out when you’ve told somebody you’ll be there. When we registered, the form asked what we anticipated our completion time to be, and I must have been thinking I could fly.
We were placed in the first heat to take off, and after about a thousand yards, I was thinking there was no way I would be able to maintain this pace. So, for the next 6.2 miles, I could almost hear a vacuum sucking me to the back of the pack.
When I’m undertrained for races like this, my goals get reduced to two primary objectives. Never stop running until it’s over. The second goal is to finish. I can report that I accomplished those goals.
It’s easy to see people passing me and become dissatisfied. I’ve found that when I begin comparing myself to other runners who may have a “runner’s body” or have other perceived advantages, it’s easy to get sulky. But what good does that do? After all, I heard it once said that the death of contentment is comparison.
David and Greg
Sometimes when people meet with me after we’ve talked about their accounts, they ask how their money compares to other people. I’m always careful to answer this question.
I think they are asking a deeper question than they sometimes may even realize. I’ve found normally what they are concerned about is do I have enough to retire. It’s easy when you don’t feel like you have enough money to become discontent, but it’s self-defeating. The better perspective may be to ask, “How can I make my money last as long as possible?”
The absolute wrong perspective is to feel like you should aggressively invest because you don’t have enough time or want to increase your money quickly. We hear that from folks with differing amounts of money. Remember, just because we perceive something doesn’t necessarily mean it’s completely accurate.
The flip side of this is called “overconfidence bias.” From a website called Toptal, “Outside of finance, in a 1980 study, 70-80% of drivers reported themselves to be in the safer half of the distribution. Multiple studies – of doctors, lawyers, students, CEOs – have also found these individuals to have unrealistically positive self-evaluations and overestimations of contributions to past positive outcomes. While confidence can be a valuable trait, it can also lead to biased investing decisions.”
Obviously, there is a fine balance between feeling like you don’t have enough money and feeling like you are set no matter what comes your way.
A more constructive way to approach this topic is to figure out how long your money can last based on a set of agreed upon projections. One of my primary goals as an advisor is to help you make your money last as long as possible. On the chance that you live to be 105-years-old, we want you to have what you need. This is the starting point when we are doing comprehensive holistic planning.
What some people may not realize is that we don’t need to continually earn double digit returns to make our money last as long as possible. We need productive returns that are consistent. If we are taking big risks with our money, then our chances of consistent returns goes down. In fact, big losses can eat a person’s money up on a catastrophic level.
I follow several financial accounts on Twitter and one account I follow was discussing how young crypto currency investors often do not understand that when you lose 30% of your position you have to make more than 30% to breakeven again. You’d have to make over 42.5% to breakeven if you lose 30%. How long does that take?
What if it takes a couple years like it did in the early 2000s tech crash or again in the late 2000s with the Great Recession? If you’re relying only on stock market investments for retirement income it will be more impactful, because you’re taking money out for income in a down market. This may cause you to run out of money years before you otherwise would.
We lessen the impact of market downturns for our clients, and I’d be happy to share more with you with you on this. Just call us at 864.641.7955 or respond to this email.
Until next week,
David C. Treece,
Financial Advisor
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel.

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