Imagine playing Monopoly but never buying a property. Instead, you simply advance your token, collect $200 when you pass GO, pay rent and try to evade jail. It sounds ridiculous, yet that is how many people approach their financial lives. I think a useful investing lesson is hidden inside that cardboard box.
One of the great ironies of personal finance is that most people spend their working lives pursuing raises, promotions and bonuses, yet devote far less thought to creating an income stream that can continue growing after they retire.
I believe in the value of home ownership and regularly encourage it. But beyond a primary home, the financial picture muddies. Put simply: Some assets help fund your life. Others require that your life funds them.
As I write this column, the S&P500 is again hitting an all-time high. This isn’t unusual, all-time highs are much more common than they feel. But it leaves many near retirees with a nagging question: “What happens if I retire just before a bear market?”
There is an old saying on Wall Street that stocks climb a wall of worry. It persists for one simple reason: Investors constantly forget that markets do not require a peaceful world in order to advance. They require businesses capable of adapting, earning, innovating and growing … despite the worries.
Most people spend decades learning how to build wealth, only to discover in retirement that they must learn an entirely different skill: how to live from it.
Most investors don’t abandon a sound plan because it stopped working. More often, they get distracted by someone else’s results that seem better, faster or more exciting.
We often measure history by wars, presidents, elections and crises. While those events are relevant and notable, another story runs parallel: that of free people asking a simple question on repeat.
What is possible?
The greatest enemy of successful investing is not always inflation, recessions, elections, interest rates or even market declines. Often, it’s distraction: the shiny object promising an easier path; the belief in “something better” than patiently following a well-designed plan.
AI raises an important question, especially for any business that offers advice: What can technology do, and what can it never truly replace? I believe technology can provide information, but a good advisor provides understanding.
I’ve held many versions of this same conversation over the years. Sometimes they genuinely seek perspective. Other times they want reassurance that everything will be all right. Sometimes they’ve already decided what they want to do and hope an advisor will simply reinforce that choice. Those are three very different conversations.
Fear is understandable. People are not foolish for worrying about war, rising prices, political division or an unexpected event interrupting the retirement plan they spent decades building. Yet my nearly five decades in this business have taught me a critical lesson: Even understandable fears can drive damaging financial decisions.
Automation allows people and businesses to do more with less. Innovation applies new ideas to create better products, processes and outcomes. When the two collaborate over time, entire industries change.
Complexity often reassures many investors. Surely a system involving so many formulas, ratings, models and highly compensated experts must mean diminished the risk, right? The truth is often the opposite: Rather than remove risk, complexity simply disguises it.
There are few transitions in life more profound than moving from “we” to “me.” Whether through the passing of a spouse or a divorce, the change is emotional, financial, and deeply personal. For those approaching or already in retirement, this transition can be especially difficult.
Imagine playing Monopoly but never buying a property. Instead, you simply advance your token, collect $200 when you pass GO, pay rent and try to evade jail. It sounds ridiculous, yet that is how many people approach their financial lives. I think a useful investing lesson is hidden inside that cardboard box.
