Is It A Return Problem?

Thank you to Rick Adkins and his July 2011 article in the Journal of Financial Planning entitled "Guilt, Ego and Monthly Paychecks Threats to Wealth Building". There he states "...most of us don't have a 'return' problem, we have a savings rate problem caused by a consumption problem..."

Even with the market volatility, or because of it, saving and investing still needs more attention. So pay attention. Don't be like the lyricist/singer in a great blues song (title unknown) that says "...I'm so broke, I can't even pay attention..."

Utopia

"...In Utopia, abundance is achieved by a restriction of needs..."

(From the book "Utopia" by Sir Thomas More, written in the early 1500's, with the introduction for the version I recently read by John Anthony Scott summarizing the writer's viewpoint)

Thankfulness

There should be a point where "enough is enough":

"...Expressing gratitude for life's blessings is likely to elevate happiness..."

 - by Robert Emmons, Ph.D. in his book, Thanks

Media Does Not Help

The news media confuses investors and increases anxiety. Oh well. The infamous investor, Peter Lynch, is quoted as saying:

"...Far more money is lost preparing for corrections..."

On Past Performance

Author, Hersh Shefrin, of the book entitled Beyond Greed and Fear writes: "...past performance is a great predictor of future expectations, not future performance..."

Another Day, Another Dollar

We have all heard this before but it was commonly said in the 1930's when day laborers made $1 per day for working in the fields. Think about that when you reflect on inflation.

Inflation is, in effect, a tax on income as it dwindles your purchasing power. Do not believe that, in retirement, you can park all your money in CD's and money markets and live off the interest because two things can happen:

(1) The interest rate can go down (like now) reducing your income

(2) The principal stays the same but you require more and more income from that same amount

Now, if your savings and investments are not needed for income in retirement, then keeping it safe still leaves less purchasing power for the future or to leave as an inheritance.

The Brain and Finances

Steven Shagrin writes in the February 2010 issue of FPA Practice Management Solutions:

"...The brain is a mysterious organ that makes human beings uniquely qualified to mess up their lives because of their thoughts and beliefs..."

And from an article referenced by this same author titled "Primal vs. Emotional Investing" research has found:

(1) Panic can derail a long-term investment strategy
(2) Patterns are sought where randomness really rules
(3) Greed feeds the desire to win "big" but the euphoria quickly turns into depression if the win does not materialize

The Buckets of Money(r) strategy by Ray Lucia, CFP(r) remains the most effective approach to retirement distribution plans that I have reviewed (see the bottom of this blog site).

The Great Recession

For those who may not have been at this site awhile or have not looked at the label on the far-left called "quotes", here is one worth repeating even though this is now called the Great Recession, though the "technical" recession is over while severe unemployment continues (which is terrible but normal):

"...The difference between this recession and previous ones is that we are in this one now..."

We have been here before. This time is not different - really.

Check out the other quotes and other topics or "search" by keywords (top-left of your screen).

Can you Be Too Conservative?

Here is a quote from an article written by Don Ezra, director of strategic advice at the Russell Investment Group, and republished in the CFA (Certified Financial Analyst) publication "Bold Thinking On Investment Management" (2005). The quote may be attributed to Charley Ellis and others:

"...individuals do not have to be investment experts...they do, however, need to be able to characterize...between...wanting to eat well after retirement and...wanting to sleep well while they are saving..."

"...they need to take relatively greater risk if their goal is to eat well and there is no guarantee...they want more safety if their basic choice is to sleep well..."

In the end, some compromises may be needed but the key is choosing with a knowledge and understanding (as much as is possible) of the potential risks and rewards.

What Makes This Recession Different?

Wish I had thought of it:


"...The difference between this recession and previous ones:

We are in this one now..."


- Anonymous advisor from Merrill Lynch

Enjoy your day,

Phil

Cicero on Governments

"The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled." -- Cicero (106 BC - 43 BC)