As a career-long financial advisor, I recognize the value in planning- especially comprehensive financial planning.
Last week, I went to Minnesota for a few days. Right on cue, the weather turned less than friendly. It was just 25 degrees upon landing- an emphatic change from the Florida weather I’d left behind. The next morning, I walked to the nearby bus stop and a mixture of rain and snow greeted me by pelting me in the face. Some are surprised to hear I take the bus. While I have other options, something about the bus line makes me feel I’m a part of something else.
As I stood at the stop shivering, it was easy to fall into the, “oh, woe is me” camp. How does the White Oaks team seem to be able to change the weather every time I come? Of course, it’s not their doing. The weather in Minnesota varies constantly. The old saying, “if you don’t like the weather in Minnesota, wait a few minutes, and it will change” is appropriate.
Planning for the Future
Intuitively, we all know life is always full of twists and turns. It is easy to dream that there are never any challenges along the way, yet life’s ups and downs always enter the picture. It is not pessimistic to be prepared for possible outcomes in life or in investing. In a previous post, “Investing and Preparing for the Storm” , I shared the Hurricane Irma experience. Through the post, I wrote how a lack of preparedness can lead to emotions and decisions that are not necessary helpful.
My recent experience walking to the bus stop in in climate weather is a mere inconvenience in the big picture view of life. I was prepared. I had my umbrella, my coat, and knew when and where to go and what to likely expect.
It is the unexpected and unplanned that disturbs us the most and triggers emotional states that encourage bad behaviors like market timing. Cash is critical in planning for the unexpected. There is nothing like having the ready cash to meet unexpected expenses. As explained in the “C, B, A’s of Portfolio Management” , cash reserves of at least six months of expenses while employed and 12-24 months post-retirement can enhance the investment opportunities and maximize returns and serve as a method to reduce volatility.
Too many focus on investments when thinking about financial planning and wealth management. Portfolio Management is only part of a solid wealth management strategy. Investing is an important component. However, ignoring or giving short shrift to the topics of tax planning, goals such as education funding, financial independence needs, wealth transfer opportunities, risk management and insurance needs enhance the sense of being prepared. This gives us peace of mind when the world turns chaotic. After all, isn’t peace of mind the ultimate objective in financial planning? Isn’t that the reason for sacrificing now, the delayed gratification, to have the peace of mind that “every little thing is going to be alright?”
A solid financial strategy, envisioning all elements of what may happen, is the high probability path to financial security and stability. Having a plan that considers the inevitable ups will in the end be just fine.
A comprehensive plan, created objectively by a fee-only, Certified Financial Planner ™ can be the umbrella and coat for the inconvenient weather or the outright storm.