You know the old saying, ‘money doesn’t grow on trees?’ How much simpler life would be if that were true? Instead of worrying about building a financial portfolio and making the right investment decisions we could just reach for a branch and grab the next amount of money we needed.
But that is not the world we live in. It is up to us to use our money wisely and make prudent decisions with the resources we have to build a better future. We need to start planning and acting early to build our retirement savings that will grow to meet our future needs.
Investment decisions require evidence, not predictions
Think about how many of us wish we could improve our physical health and well-being. Many of us would like to get into shape and live a healthier lifestyle, but we wish it were easier. The health and fitness industry understands this perfectly and they bombard us with ads telling us how easy it is to lose weight and to get into shape.
It’s just not that simple, and neither are investment decisions to plan for the future. Financial planning requires a detailed analysis of different methods of evaluating investments, industry sectors, and economic trends. You need to take in and process all of this information so you can earn the kind of returns you need to achieve your goals.
Evidence-based investing provides a path to success
Let’s go back to the fitness analogy for a moment. We could just buy into all of the ads we see blasted across TV and online and assume that, if we just take that pill or drink that “Shark Tank” potion, we’ll get into the best shape of our lives…in just three weeks!
Or, we could try the evidenced-based approach physicians and nutritionists recommend for weight loss and healthy living. This isn’t what we want to hear, but eating sensibly and moderately, and regular exercise is a proven path to better health if we choose to follow it. The evidenced-based approach increases our probability of success, and we don’t have to waste time and money on solutions that don’t work.
The same principle is true when it comes to making successful investment decisions. Hot tips about “sure things” and “the next Amazon” sell dreams of overnight success. But they don’t make anyone money other than the promoter.
What does work is a plan of regular, disciplined saving and investing in the ingenuity, enterprise, and profitability of the great companies of America and the rest of the world. Save. Invest. Diversify. This is the financial blueprint that has always worked.
But that is not enough. There is one more ingredient to the recipe needed for a successful investment plan; patience.
Long term investing is like cooking a turkey
Successfully growing an investment portfolio is a lot like cooking Thanksgiving turkey.
When you cook a turkey, you don’t open up the oven and check progress every few minutes. Do that and it won’t cook evenly or finish in time for the family meal.
No. You keep the bird covered in a roaster and in the oven for the recommended amount of time. Of course, you check on it occasionally. That’s why you used a meat thermometer. We only take it out of the oven when it’s ready to go.
A similar approach is needed for your investments. Create a solid plan, put it to work, trust the process, play the long game. Only check in periodically to make sure things are still moving in the right direction.
A financial advisor can help you make better investment decisions
The good news is that evidenced-based investment strategies, grounded in academic research, that offer a higher probability of success are readily available. And a competent financial advisor can be your guide in making it work for you.
While investing can be stressful because of its inherent uncertainty. Working with an experienced advisor who knows the ins and outs, and the ups and downs, can help you design a portfolio that fits your needs. They also guide and help you to stay on track when things get scary. Because they will.
Sound advice doesn’t sell subscriptions or drive TV ratings, but it will do something far more important. It will give you the greatest probability of achieving your financial goals. It gives you peace of mind. And, it makes you feel smart and successful.
So talk with an experienced advisor. You need someone to help you build the plan and portfolio that is right for you. It is worth it many times over.
It pays to get help when it comes to saving for retirement. If you do, you can create an income that will buy everything you need for a lifetime.