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Invest with a plan for success

Sep 22, 2020 | Linda Sama, CFP®


With so many uncertainties facing us, we naturally fear the worst financial outcomes. How do you gain the confidence to move forward? The secret is…

Financial advisor meeting

Frequently people pull me aside to ask me my opinion about the market.  They are looking for direction, an outlook, a vision for their future but I think what they really want to know is how to reduce their anxiety.  Do you feel this way sometimes? 

With so many uncertainties facing you it is common to want answers. Your thoughts naturally go to the worst possible scenarios. A lack of control sometimes creates these feelings and makes you feel anxious about your future.  

I have often heard people say “investing in this time is like no other in history.” And yet, if I learned anything from my 30 years of advising clients, it’s that each day presents uncertainty for the future and as well, this always creates anxiety for investors.

As unusual as this year has been, 2020 is just like every other historical period. I have learned the secret to improving your probabilities of achieving financial success and confidence for your financial future. Fortunately, the answer is quite simple and frequently overlooked. 

That secret is YOU.  It’s all about your behavior and the good news is you have complete control over that aspect of the equation. 

The millionaire next door

Here’s an example. You might have heard of the “millionaire next door”. That story is about an everyday individual who, over his working lifetime, regularly set aside a percentage of income into a retirement plan and over many years accumulated well over a million dollars of wealth without even realizing the power of his actions. This behavior is simple and demonstrates how the discipline of saving in an automatic investment plan makes it far easier for the investor to weather the storms of the market.  

Research has shown that simple yet effective behaviors like this and the ones outlined below have turned a basic saver into a savvy investor:

  1. Invest with asset allocation and diversification
  2. Invest for the long term
  3. Invest with professional management

The secret to success

Behaviors like these are easy to commit to and will help with your success, but most importantly you must still define who and what you care about and how you envision your future.  Planning is the essential behavior that makes life’s transitions easier.

I have helped many “millionaires next door” who never considered what life would look like or cost in retirement, let alone planning how much they could spend, save, or gift during those years.  
Asking those questions and advising clients with the appropriate strategies and investment vehicles is the expertise I have been developing for 30 years. The series of conversations that we undergo together incorporates a process of discovery as we build a plan together.  Unfortunately, the most overlooked behavior of many people is to make a PLAN.  
Creating a plan starts with a vision of what you want and a roadmap of how you will get there.  Implementing and monitoring is key and often calling for occasional adjustments along the way.  A plan can contain specific goals like:

  • Caring for the special needs of loved ones 
  • Anticipating a big life change
  • Deciding on what kind of lifestyle truly brings you joy

Sometimes your plan can be as simple as deciding ahead of time to adjust your retirement spending in a year that your portfolio did not produce the anticipated returns.  This is like having guardrails to keep you on track with your plan of leaving a legacy behind or having a safety net for the larger expenses that could come your way. Thinking ahead and using these guardrails for retirement income will adjust for both good and bad years; this is how to plan for the varying rates of return that occur with a diversified portfolio.  

Is it economics or mindset?

Here is another example of how our discovery conversation could guide our planning together.

My 12th-grade daughter came home from school and was so excited to show me her microeconomics textbook.  Since I wanted to see what was in store for her, I opened it to Chapter 1. The textbook described economics as a social science that studies the choices made by individuals, businesses, and governments and how the results are all interconnected.  

The first page described the term “scarcity”, as the inability to satisfy all our wants. I thought long and hard about this concept because I like to see the glass as half full and work to maintain a positive mindset. The paragraph went on to say that everyone rich and poor alike faces scarcity and it is everywhere.  Faced with scarcity, we must make choices and choose among different alternatives.  

Even a contemporary economics textbook preparing a young adult for college is conveying a very specific point of view; there isn’t enough to go around for all of us to live well.  I believe having choices in life makes you feel empowered and is the basis for living well. Understanding your options and the implications of your decisions helps you to feel more confident.  The process of planning helps you to define your options and see the potential outcome from the choices you can make.  And there are many options available for you.

So what is important to you?

I created a system of 15 questions which provides the lens through which to focus on what is really important to you.  Your plan design depends solely on you and you have the control to change, adjust and respond to whatever life throws in your way.  Once you feel that sense of control and understand the resources you have available, fluctuations in the market will have less power over you. 

Creating confidence

Years of experience taught me that clients who articulate their goals and follow a disciplined approach not only create their desired outcomes in life but often feel less anxious as they move through the ups and downs of the markets.  I also found that having me on their side to guide them through times of greater uncertainty gave them the confidence to move forward and stay the course on their plan.

Make planning your strategy and priority.  You have control with the decisions and choices you make and you too can feel reassured during difficult times. 

Contact me today to learn how to create the intentions, guardrails, and results with your WealthPlan.