You Have to Know the Alphabet First

I remember a quote that read “One must first learn the alphabet before they know the greatest truths.” I don’t recall who said it, but today it seems more important than ever. We are bombarded in all areas of our lives with complex information that lacks reference to any foundation. We are forced to try to translate something without first being able to speak the language.

My goal today is the help set the stage for Financial Perspectives, which is focused on providing an avenue of understanding to the financial planning and investment markets.

Let’s build the foundation before we put on a roof. So where do you begin in the financial planning process – especially today? Some of this you’ve heard before, but the best advice is always worth repeating.

  1. It starts with your goals and objectives. You must set them. Whether you plan on your own or with an advisor, you are ultimately responsible for setting those goals and then clearly articulating and integrating them into a process.
  2. Then, whether on your own or with an advisor, you must be engaged in the process, define the process, quantify the process, and prioritize the process. You should be proactive, not reactive. People are concerned today because they are forced to be reactive rather than proactively understanding that events like today can and do occur.
  3. Your risk tolerance is a big factor in the planning process, not just investments. Adherence is often directly related to your ability to sleep well during tough times. Risk tolerance can and will change over time. Risks in the market and your life change as well. You should be prepared to adjust to those changes.

No matter what your occupation or lot in life, your best chance at achieving and or preserving your long-term wealth is through thrift. If the goal is long-term wealth accumulation, then it is always better to be a lender rather than a borrower. One of your best chances of securing your long-term goals is to also be in a career you enjoy for a long period of time.

Financial planning is not just “investing in the stock market.” True financial planning never has been. It is unfortunate the financial services industry has painted that picture. In fact, one cannot adequately “invest” without the financial planning process. That process requires a review of other major aspects of your life including cash flow, insurance, retirement, education, and other goals as well. Only then, would one truly be ready to invest.

Nothing is certain except uncertainty. You must let go of the idea that you can always be right. Life is infinite in its possibilities. Instead, by being proactive and thoughtful and making a point of taking responsibility for your decisions, you offer yourself the opportunity to be less wrong than others, which is a good place to be.

This is the beginning of the planning process and lays the foundation for improving the quality of the rest of your life. These points and your attitude are all items you can control. The market crisis is unnerving, but it’s time to stop reacting and time to nurture an environment so you can create a strategy prospectively.

Disclaimers:
This article contains the opinions of the author. The opinion of the author is subject to change without notice. All materials presented are compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This article is distributed for educational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products or services described in this website or that of the author’s.

Mike Dubis does not guarantee the relevancy, appropriateness, or accuracy of any outside information or links. Mike Dubis does not render or offer to render personalized investment advice or financial planning advice through this medium. All references that might be made to an investment or portfolio’s performance are based on historical data and one should not assume that this performance will continue in the future.

THIS COMMUNICIATION MAY NOT BE USED BY YOU AS A RELIANCE OPINION WITH RESPECT TO ANY FEDERAL TAX ISSUE DISCUSSED HEREIN AND IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY YOU FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON YOU BY THE INTERNAL REVENUE SERVICE.