It’s that time of the year where we look back at the past 12 months and we either kick ourselves for the missed opportunities or we look back and say, “I am glad I did this”.
Did you have any “Wow” moments this year when it comes to your financial plan?
My guess is you may be disappointed. Right?
Did your strategy work out this year? Did you hit that magic % you were told with absolute conviction by your advisor / salesman / snake oil sales man? Did all the promises of a new year in January materialise? Has your advisor now told you that gold is the thing to be in and that Trump will save us all?
This conversation used to really get to me. I used to listen to all the “experts”. I saved diligently. Invested in all the products that they could put me into and then? Well, it never really turned out the way they said it would. And I felt like I was going backwards.
The financial world is littered with themes. They all sound marvellous and each advocate will say it’s the holy grail for your portfolio and you have to be in it. They will produce fancy marketing material (have you noticed that everyone says that they are number 1?)
There are many advocates who say “buy and hold – you will win” and then they cite people like Warren Buffett who had many winds in his sail when he made his billions. It was not just his strategy it was the time he was starting out. He literally got in as the great bull market in equities was starting and he rode the wave.
John Templeton, another investment great, took his investment shotgun and shot everything in sight and he struck it rich.
In the 26 years that I have been in the financial services industry, I have yet to meet a person who became rich through the strategy that is peddled every day – work hard, save in mutual funds and everything will be ok.
On the other hand, I have seen bad advisors advising clients to purchase things that they don’t need - with fees that are pretty much criminal, and getting away with it because “he was a nice guy”. I have had to endure countless presentations by analysts with qualifications as long as my arm, only for them to come back 12 months later with a story that’s now different from the one where my money went and “it’s a pity”.
I have met people who were successful. They all had one thing in common. They were accountable for their results. There is a famous saying that Wall Street is the only place where people who drive Rolls royces pay money to get advice from people who use the train (or something like that). And its true. Most financial advisors live paycheck to paycheck – its only a small percentage that are financially secure. So why would you risk taking their word that “you will be ok in 20 years”?
I know from my own experience and study that the methods Warren Buffett uses now are not the same methods he used to acquire his wealth. The methods he uses now carry very little long term risk and that’s the fallacy of his strategy (in my view he is a master at using derivatives to take risk out of his investing). The market today is not the same as the market 40 or 50 years ago. The methods that were effective many years ago simply do not work now. And no amount of glossy marketing material will change this.
We are now in the era of robots telling us what to do and “experts” saying “it’s so simple - just buy this and wait”. My problem is what if they are wrong?
In short, your choice to improve your financial position starts with you are willing to listen to. Choose wisely.