“Money isn’t the most important thing in life, but it’s reasonably close to oxygen on the ‘gotta have it’ scale.”
Want to earn more money? Most people would say unabashedly, “Yes, please!” Yet how many people “wish” and “hope” for a higher income or more cash without taking concrete steps towards that goal?
As Zigler’s quote above reminds us, money isn’t the most important thing in life. Yet it touches nearly every area of life that we care about. More money can help you:
“Through perseverance, many people win success out of what seemed destined to be certain failure.”
The Myth of Overnight Success
When it comes to “making it,” the media loves to report on overnight successes, lottery winners, and tech companies that seem to come from nowhere to capture the imagination of the market. It is exciting to contemplate being handed a fortune and fantasize about spending it.
Exciting, but also quite misleading.
Those who seem to have suddenly appeared out of nowhere to achieve “overnight success” include:
We just ended the most wild and unpredictable month for stocks in years. So let’s examine one of the “unintended consequences” of volatility: poor returns that don’t match expectations.
“The Average rate of return doesn’t equal Actual rate of return.” We have said this time and again to clients, readers, and other advisors—especially when we prove it on calculators at Truth Training, the training my husband, Todd Langford, conducts with advisors and other financial professionals. I explained this concept in my own words (without the calculators) in one of my Money Myth videos: “Money Myth #6: Average Rate of Return Reflects Actual Rate of Return.” In this article, we’ll look at a different way of expressing this truth, drawing from some savvy analysis and commentary from Hans Wagner. We’ll also add our own observations about why this matters, and what you should do about it!
Following a disciplined process using sound investment principles over many years, Wagner was able to quit his job at 55, “retiring” to the work of writing and teaching about investing. In his article in InvestingAnswers.com, “CAGR vs. Average Annual Return: Why Your Advisor is Quoting You the Wrong Number,” Wagner demonstrates:
Cary Siegel went to an excellent high school and college, then graduated from a top business school with a finance concentration. Next, he learned what he ACTUALLY needed to know to manage his personal finances. Why Didn’t They Teach Me This in School? is the book he wrote to share his lessons learned, first with his five children, then with others.
Subtitled “99 Personal Money Management Principles to Live By,” Siegel’s book has become a best-selling graduation gift for good reason. It covers topics such as budgeting, spending, credit cards, investing, mortgages, insurance, and much more in plain English. It’s full of practical, real-world wisdom and tips that, unfortunately, you probably didn’t learn in school either!
“Maturity is the capacity to endure uncertainty.”
Leaks. Lawsuits. Continuing questions about Russia. Political unrest and FBI dramas. A media that has become both the attacker and the attacked. Conflicts of interest, ideologies, and personalities. Salacious stories to distract us from threats of WW3. Citizens weary of increasing political polarization, terrorist attacks, school violence, endless conflicts in the Middle East, and bad news.
These are uncertain times. Regardless of which side of the political aisle you are on, you probably agree that we’re on a wild ride. And it seems to be far from over. Increasingly, we we see signs of the uncertain times in economic indicators, including the stock market.
Stocks are up, up, up! Then down with a thud. Wait… no, up again!?
“When we leverage, we aggregate and organize existing resources to achieve success.”
– Richie Norton, The Power of Starting Something Stupid.
Do your assets pass the leverage test?
When you invest or store your dollars somewhere, it’s important to consider if – or on what terms – you can borrow them back should an urgent need for cash arise. While you may not plan on wanting or needing your dollars back, it’s common for people to find themselves in financial situations they didn’t anticipate.
The ability to use an asset as collateral is also a test of its strength. Dollars in the form of saving accounts, certificates of deposit, and other negotiable instruments can be easily collateralized in most cases. Unfortunately, savings accounts and CDs offer an extremely low rate of return as well as little flexibility or other benefits.
“The art and science of asking questions is the source of all knowledge.”
A few weeks ago, we published an article, “Essential Questions to Ask BEFORE You Apply for Life Insurance” that gave guidance on:
- choosing life insurance companies
- evaluating types of insurance
- policy time frames
- avoiding common mistakes, and pitfalls, and more.
We received an excellent response to the article, and today, we continue the conversation to discuss the questions and decisions that come into play during the application process. These questions are relevant to whole life insurance and may not apply to other types of life insurance, especially types with little or no cash value, or life insurance that does not guarantee the death benefit permanently. How will you know? Ask the questions!