With the election a short 45 days away, the news stream is unrelenting. Political TV ads, postcards, and of course those phone calls during the dinner hour – it’s an all-out media assault designed to convince you that if the “other guy” gets elected, the world is sure to end. It’s enough to elicit one of three emotional responses: either anger and outrage toward the opposition and confirmation bias toward your selection, utter fear and terror at what may or may not happen, or complete apathy toward the whole process. Regardless of where you stand, it’s important to recognize the effect that this election might have on your portfolio… or lack thereof.
https://prosperion.us/wp-content/uploads/2020/09/i-voted.jpg8301500Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2020-09-21 15:07:462020-09-22 12:07:49Improving Investor Behavior: Keep Politics Out of Your Portfolio
If COVID has brought anything to business owners’ attention, small and large alike, it’s the need for a financial plan before bad news drops. A year ago, the likelihood of a worldwide pandemic effectively shuttering business in the U.S. for six months seemed so outlandish that had you suggested it; you would have been laughed out of the room. In hindsight, that suggestion would have made you look like a genius or a prophet.
My point is this: every business needs a financial plan to help guide and keep them afloat no matter how good times may be or how plentiful the work may appear. In reality, it’s no different than the financial suggestions we impress upon our clients. As an independent advisor, I run a business and help my clients think about how they run theirs.
So, what have the impacts of Covid-19 taught us from a business perspective? What should businesses consider as they navigate through today and plan for the future? As I look back over the past five months, I see four key actions to take now to “LIFT” businesses.
https://prosperion.us/wp-content/uploads/2020/09/business-need-a-lift.jpg4261000Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2020-09-08 14:00:132020-09-08 14:00:13Does Your Business Need a LIFT?
For business owners, improving investor behavior can mean more than a focus solely on financial instruments. The intent of this column has been improving investor behavior, which often discusses market investments like equities, bonds, and other financial assets. But it’s important to consider how our investor behavior applies to other critical areas of our lives, namely in the ownership and running of a business.
As an independent financial advisor, I’m in a unique spot. I own a business and am responsible for running that business while helping my clients think about running theirs. I have a dual perspective, both as an advisor and as a business owner. So this week, I want to cross over into the business world and encourage you to consider how your investment behavior (i.e., the beliefs and attitudes you have about your business) and possibly the most valuable asset you have, your employees, might be affecting your results.
Every meeting we have with clients includes a line item on the agenda: Fire Drill.
What would you do if the market dropped significantly tomorrow? What would that look like for you? For years now it has felt like an unnecessary discussion point, even with the occasional pull back due due to a tweet or tariff threat. Yet we keep it on the agenda because, in the words of Mike Tyson, “Everyone has a plan until they’re punched in the face.”
Two months ago, no one could have anticipated a worldwide pandemic resulting in a virtual halt of economic activity. Yet it happened. But isn’t that the purpose of fire drills? To know what the plan is if-and-when something disastrous happens?
https://prosperion.us/wp-content/uploads/2020/03/fire-drill.jpg5001000Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2020-03-27 09:48:462020-03-27 10:09:57Fire Drills and Why We Do Them
Cold winter weather means it is soup season here in Colorado, and none feel more familiar than Campbell’s Tomato Soup. Just the name conjures a familiar aroma, a warmth in your chest.
Campbell’s feels familiar because it’s been an American icon for more than a century. Introduced in 1898, Campbell’s tomato soup is an excellent benchmark for understanding the impact of the persistent enemy of all investors: inflation. For more than 100 years, the size hasn’t changed, but the price sure has. About 45 years ago, in 1974, the soup cost about $0.12 per can. Today, it retails for about $0.87 per can. That points to an average inflation rate of 4.3 percent.
Forty-five years may sound like a long time, but that’s about the length of a typical retirement. Read more →
The average American spends more than 85 hours per month watching TV. The same person will likely spend about 265 hours sleeping and 228 hours working. Know how much time they’ll spend working on their finances? About 1.8 minutes, (yes, that works out to 96 seconds) per day.
It seems crazy to me that people will spend an hour on Yelp trying to find the perfect taco bar for dinner, but will invest thousands of dollars based on a 30-second spot on the Mad Money TV show. Read more →
https://prosperion.us/wp-content/uploads/2019/11/tv-picture.jpg7551500Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2019-11-20 13:22:122019-11-20 13:22:12Improving Investor Behavior: Investing time now will pay dividends later
Anyone who has ever spent time outdoors understands and appreciates the value of a sharp knife. Whether stripping wood to start a fire, using it as a cooking utensil, cleaning a fish, or for any of a million other purposes, the trusty knife is an essential tool. But knives also have inherent danger as well. Used the wrong way, a knife can quickly put an end to a fun camping trip, or worse – a life.
With this in mind, let’s consider compound interest. For those who don’t understand the concept, compound interest is money earned on money spent or saved, typically expressed as a percentage. If you have a savings account, you’ve earned interest (albeit a tiny amount). This interest is compounded (i.e., multiplied) when the amount is left alone over a period of time.
In previous articles, we’ve discussed time as our most valuable asset. With only 1,440 minutes per day, how we choose to spend our time and where we focus our attention deserves the same rigorous budgeting that managing money does, perhaps even more so. Money is a resource; there can always be more of it. But time is finite, and there is no getting it back once it’s gone… or is there?
There’s a well-known quote by American author H. Jackson Brown that goes, “Don’t say you don’t have enough time. You have exactly the same number of hours per day that were given to Helen Keller, Pasteur, Michelangelo, Mother Teresa, Leonardo da Vinci, Thomas Jefferson, and Albert Einstein.”
But I want to challenge the notion that we all have the same amount of time each day. Think about it like this: I doubt Michelangelo had to mow his yard. I bet Thomas Jefferson didn’t spend much time in traffic. And when Einstein showed up to the restaurant, they probably made a table available for him. Read more →
https://prosperion.us/wp-content/uploads/2019/09/clock.jpg6461500Steve Boorenhttps://prosperion.us/wp-content/uploads/2017/02/whitelogosized.pngSteve Booren2019-09-20 11:21:462019-09-20 11:21:46Improving Investor Behavior: The Price of Time
My son and I were in the car driving to the store as he struggled to plug in his phone with a USB cable. He flipped the cable back and forth a few times before it finally slipped in. “If I had a superpower, I hope it would be to knowing which direction I should use when plugging in a USB cable.”
Over decades of advising families, I’ve studied their investment behavior. From those who made mistakes to those who succeeded, a list of significant practices naturally came to mind. These “superpowers” help make investors successful. They can’t leap over buildings with a single bounce or see into the future (though this could be a pretty good investment superpower), but they do manage to achieve better than average results, almost as if by magic. What are these superpowers?
If I asked you to define retirement, how would you describe it? Take some time and think about it. You’re probably envisioning white sandy beaches, trips to the golf course, and visits with family, free from the constraints of work and email. Sounds nice, right?
That’s how a lot of people see retirement. The belief is that upon reaching a certain age (usually around 65), retirement should be an expectation – a foregone conclusion. And once retired, people will get to enjoy “the good life” of unlimited freedom, time, and fun.
But when I’m asked to define retirement, I do it a little differently. I think back to 1996. Read more →
