moneyFYI
Financial Freedom Is Merely Organized Common Sense
Conflicts Confuse Us
Have you noticed how difficult it is to be an investor over time. At one time or another, most people have doubts, fear, and even euphoria. Emotions are a problem.
Many of those arise because we have not come to grips with conflicts. We each have many.
Growth versus Security
You cannot have both. High growth investments automatically include the ability to fall in value. You could own government bonds instead but then growth goes out the window. Most people end up in between somewhere.
It is very difficult to own a well-balanced portfolio. That’s the common solution. It is much more than just owning different things. They must be different things that do not move together. For example, from the old days, owning steel stocks and owning automakers provide little diversification because under conditions that harm automakers, steel will fall too. If you buy unlinked businesses you might avoid that. Maybe Coke and a major bank.
There are more variables. How they are financed. How much R&D. Management skill. Market share. Price control. Cost leader. Country where they are based.
One thing to remember. In a crisis every investment is correlated with every other.
Now versus Then
You cannot save what you spend and you cannot spend what you save.
This is a time recognition issue. People must learn that we live in a time continuum and you can only spend your money once. You do get to choose when you spend it and it need not be at the same time you earn it.
You can earn today and spend it in the future if you save it. You can spend it today and earn it in the future if you borrow.
Some people see it as discipline. Discipline is too hard. Learn to be time competent and assess not only how much you need to spend, but when you will earn and when you will spend it.
Organized or Random
Organized requires some effort random does not. For example, if you never put things away after using them, you will save a little time. If you keep track of how much you save versus how long it takes to find them later, you will almost always find that the time you saved with organized is a sound investment.
There are other examples of this. Grocery shopping with a list to fit next week’s meals versus picking up things you think you need.
Work hours or entertainment hours. When they can overlap it is hard to work at home.
The bit to take away.
When you feel dissatisfied, decide if it is because of conflicts. Usually conflicts arise from no attention to detail resulting in unreasonable expectations.
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I build strategic, fact-based estate and income plans. The plans identify alternate ways to achieve spending and estate distribution goals. In the past, I have been a planner with a large insurance, employee benefits, and investment agency, a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business. I have appeared on more than 100 television shows on financial planning have presented to organizations as varied as the Canadian Bar Association, The Ontario Institute of Chartered Accountants, The Ontario Ministry of Agriculture and Food, and Banks – from CIBC to the Business Development Bank.
Be in touch at 705-927-4770 or by email at don@moneyfyi.com
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