Video Blog
Why Do You Save Money?
- Saving money in general is important
- Saving money for larger expenses is necessary
- Saving money to have more control over your time is priceless
Investing & Biking
Investing and biking... stay with me on this one!
If you've spent any time biking, you know the difference between biking with a headwind vs. a tailwind. A tailwind tends to require less effort and you don't necessarily realize how much it's helping you... that is until you go a different direction and face a headwind instead.
Investing can be a similar experience. We generally don't recognize the tailwinds and how much they help investment returns. It's not until we start facing some headwinds that we realize how much we've been helped by favorable conditions in the past.
The good news? Conditions change. Power through the current headwinds and stick with your investment plan. Now is not the time to coast!
#GoodAdvisorsFinishFirst
#Biking
How to Approach a Market Decline
This is my 11-year-old daughter Haylee. We're having an important discussion about our options during market declines... because if you can't explain it to an 11-year-old, you probably don't understand it well enough yourself.
As a young investor, she's gone through a few declines and is learning how markets work. We discussed 3 basic options right now:
*Buy
*Sell
*Hold
She has a time horizon of at least 5 years before we anticipate needing the money. In that case we don't want to sell during a down market if we don't have to. With that length of time, we feel fairly confident that we have time to wait for a recovery. We ruled out selling. Buying high and selling low is not a good strategy
By default, that means we will at least be holding her current investments.
Then the decision comes of whether she would like to buy more. We believe there will be a market recovery and discuss the advantage of using the current market discount to buy more shares at a lower price... similar to seeing a bike on sale at the store. Would you not buy the bike because it's marked down???
She's done great job of giving, spending, and saving over the years. She recently made some extra money from doing chores and babysitting with no immediate need for the money. In this case she decided to take save of her savings and buy more shares in her investment account for her longer term goals.
#ProudDad
#GoodAdvisorsFinishFirst
I Bonds
This falls under the category of, "If you have explained something more than twice (today), record a video about it!"
*What are Series I Savings Bonds?
*Do they really pay 7.12%!?!?
*What's the catch?
*How to purchase them?
Quitting Your Job to Start a Business
So you’re thinking about quitting your job to start a business.
Here are some financial considerations before making the leap:
*How much personal financial runway do you have?
*Rather than the typical options for money of spending, saving, or giving away, you are presented with a 4th option of reinvesting in your business
*Be prepared to “live small” for a couple of years. Those big ticket purchases may have to be put on hold
*It’s okay to pause your retirement account contributions and invest in yourself and your business instead
Keep in mind that these are only a few of the financial considerations. There are many other social and emotional considerations about quitting your job to start a business!
Financial Tips for the End of the Year
As we close out the year there are several things that I do with my personal finances that I thought would be beneficial to share.
Review our budget - Are we spending money on things that we said were priorities?
Tax planning - How can we best use the tax incentives and deductions to keep as much of our income as legally possible?
Review net worth change - What impact did our income and expenses have on our net worth?
It’s important to review this considering the 3 G’s
Gratitude - Focus on giving thanks for what you have rather than what you don’t have
Generosity - Support many great causes and people
Grace - Accept that thing don’t always turn out as expected. Learn from setbacks and keep moving toward your goals
I hope this helps keep some perspective about your personal finances and sets the tone for a prosperous New Year!
Focusing on More Memories Instead of More Money
Winners & Losers - 2021 Proposed Tax Legislation
With any major changes to tax legislation, there are projected winners and losers. The proposed tax bill is no different.
Projected winners:
1️. The Federal Government
2️. The "not rich"
3️. Those hoping for a step-up in tax basis at death
4️. Professionals trying to sort this thing out have job security
Projected losers:
1️. Married people - the marriage penalty is back!
2️. High earners with unrealized capital gains
3️. Corporations with income over $5 million
4️. People with large IRAs or Roth IRAs
Keep in mind that this is still only a proposed bill. Don't overreact, but stay tuned because there will likely be changes.
Widow(er) Tax Penalties
Here's a tax penalty that's often overlooked: Becoming a widow or widower.
Understandably, losing a spouse is not a popular topic of discussion.
Most married couples will choose the Married Filing Jointly (MFJ) status on their Federal return. The MFJ status effectively doubles the amount of income couples can earn compared to the Single status before going to the next marginal tax bracket.
Even though many surviving spouses experience a reduction in income, that reduced income is often taxed at a higher effective rate than when both spouses were living.
That's often the result of income being tax-deferred (pushed to a future date), pensions, capital gains, or other taxable sources of income.
What are some practical ways of avoiding a higher tax rate as a surviving spouse?
Milestone Ages
When doing #FinancialPlanning, there are typically some milestone ages that we target for reaching #financialindependence
Most of those ages are targeted because of specific tax laws or Government benefits that become available.
A few key ages are:
* 59 1/2
* 62
* 65
* 67
* 70
* 72
There are many other ages, benefits, tax considerations, and cash flow priorities to consider. Every situation is unique, and I highly recommend working with a professional who can help navigate your options!
Parents, Talk To Your Kids About Money
Parents, talk to your children about money!
There are very few things that I've witnessed destroy family relationships more quickly and permanently than arguments over money.
Most of the arguments are preventable by having proactive communication. Remember this equation:
Happiness = Reality - Expectations
Proactive communication can help set expectations that are in line with reality. False expectations are the breeding grounds for resentment, envy, and greed.
It's generally not that your children are greedy or can't wait to get rid of you. Most children are looking for how they can best honor your legacy and structure their own finances around your wishes.
If you're not comfortable having "the talk", bring in a third party who can help facilitate the conversation. It's one of my favorite things to do in my profession.
Don't delay... this could be one of the greatest gifts you give your family!
Money & Happiness
Money can't buy happiness ... or can it?
I've been doing some self-reflection on my relationship between money and happiness. Using the items in my own backyard as an example, I found a common thread between certain items and a level of happiness.
However, it wasn't really about the things, it was about the experiences those things provided. In particular, things that tend to bring people together seemed to provide the highest level of happiness.
The amount spent was generally not what determined happiness levels. At least for me, happiness is strongly tied to people and experiences.
My job as a financial advisor is NOT to simply help people accumulate things or wealth, but helping clients identify what's important to them and help allocate resources toward that goal.
I'd love to hear your thoughts. What is something that was perhaps low cost but brought a high level of happiness?
Gain Needed to Break Even After a Loss
What's the percent gain you need to break even after a loss?
Hint: It's going to be a number greater than the loss amount!
For example: A starting value of 100 faces a 10% loss and becomes 90. A gain of 10% on 90 is only 99. So you need something greater than the loss amount to get back to even. You would need 10 / 90 = 11.1%
Taking the example a bit further:
* A 20% loss requires a 25% gain
* A 30% loss requires a 43% gain
* A 50% loss requires a 100% gain
The greater the loss, the greater the corresponding gain that's required to break even. Be prepared and manage your risk accordingly!
NICSTO
State of Iowa taxpayers, if you’re looking for a powerful tax credit in 2021, here’s one you may want to consider.
It’s the tax credit for contributing to School Tuition Organizations (or STOs). Those who generally make good candidates for the tax credit are those who:
* Pay Iowa income tax
* Are charitably inclined
* Support private or Christian education
The Iowa Legislature made a change starting in 2021 to increase the tax credit for STOs from 65% to 75%.
How to Make Changes to the Advance Child Tax Credit
The IRS recently came out with the portal where you can make changes to your monthly Advance Child Tax Credit payment. So I tested it out and the login process was somewhere between going to the doctor for physical and colonoscopy in terms of invasion of privacy.
Unless you have an existing IRS username, you’ll need to create a login using their service called ID.me. That’s where the fun begins. You’ll need a picture of the front and back of your Driver’s License, a webcam that can record 3 seconds of your face, and a bunch of other personal information to create an account. If you are wanting to make some changes, give yourself some extra time and be prepared for some added frustration.
Advanced Child Tax Credit
A word of caution to those who qualify for the monthly advance child tax credit starting this July: Beware of lifestyle creep.
Lifestyle creep is increasing your rate of spending as your income increases.
After more than 15 years in the financial services industry, I have rarely encountered clients who do not automatically adjust their spending higher after receiving an increase in income.
Take notice… It’s easy to mentally justify spending that extra money, simply because it’s there.
Don't assume you'll be the exception and somehow avoid lifestyle creep... unless you have a plan, in advance, for how you're going to handle the Advance Child Tax Credit.
Health Insurance
Friendly reminder about health insurance... especially for those who are not offered coverage through an employer.
You. Have. Options.
Don't forget to check out the health insurance marketplace at healthcare.gov (affectionately known as Obamacare)
I just had a client able to find the exact same plan that they had previously for less than half the cost.
DYI vs Hiring a Professional
When does it make sense to take the DIY approach vs. hiring a professional?
I have been a longtime believer in the DIY approach, but my sentiment shifted in the last few years for two main reasons:
1) A growing family
2) Starting a business
That changed the equation for calculating my opportunity cost... asking the question: What else could I be doing with my time?
If you’re looking for a quick way to evaluate whether the DIY approach makes sense, here are a few key questions:
* What is the potential cost of a mistake? Both financial and physical.
* What could I be earning in the time I’m spending on the project?
* Is the project something I actually enjoy doing?
*Is the project likely to cause a domestic dispute? If you’ve ever tried to tackle a home improvement project with your spouse, you know exactly what I mean.
In summary, don’t just evaluate based on the total cost of hiring a professional, but consider the opportunity cost as well.
Setting Goals
My 10-year-old daughter recently had a big day. She made the biggest purchase of her life using her own money. It was a great lesson in setting a goal and having the discipline to reach it.
She had a goal of a new bike.
She gave herself a budget.
She had a timeline of when she wanted to buy it.
Then came the hard work of doing chores to earn money, being willing to sell some of her things to speed up her progress, and having the discipline to not spend the money in the meantime.
A few of her takeaways from the experience:
- Getting a discount makes a big difference, especially on higher priced items
- Don't forget about sales tax. The sticker price is not the same as the price you pay
- Her Dad is going to use every chance to teach her financial responsibility
One of my biggest lessons came when we found a very nice bike, but it was out of her budget. She quietly whispered to me, "Dad, I can't afford it." As a parent, it's hard to see your child be disappointed and fight the urge to step in and pay the difference. But I didn’t want to deprive her of the feeling of accomplishment, knowing that she had fully earned every part of her new bike.
Investing vs. Gambling
What’s the difference between gambling and investing?
Both investing and gambling:
*Involve the exchange of capital
*Involve calculating risk
*Offer high potential profits for taking additional risk
*Offer ways diversify risk
However, there are a few key reasons why I don't support gambling:
1. Gambling is simply transferring wealth from one party to another
2. The casino has the odds stacked in its favor (the house always wins)
3. The longer you play, the less likely you are to walk away a winner
Here are the reasons I choose to invest:
1. Investing seeks to GROW capital for all parties involved
2. There is no "house" stacking the odds against you
3. Investors have the ability to stack the odds in their favor simply by extending their time horizon
The line between investing and gambling can certainly become blurred based on behavior, but hopefully this is a helpful framework to identify which one makes sense to you.
Financial Leverage
Have you ever wondered how financial leverage can impact your personal finances? You should!
Note well: If you have any sort of debt, you are using leverage
Without the use of leverage, it's a 1-for-1 move when there's a change in value. A 10% change in value translates to a 10% gain on your invested capital.
Introduce leverage and that equation changes. Buying a house is a common example of using leverage.
Positive example: Purchase a house for $100,000; put $20,000 down (20%); finance the remaining $80,000 (80%). The house increases in value by $10,000 to $110,000. What's your return on invested capital? Hint: IT'S NOT 10%. Your return is $10,000 on $20,000 of invested capital, which is a 50% return ($10,000 / $20,000 = 50%)
What works for you can also work against you.
Negative example: Purchase a house for $100,000; put $20,000 down (20%); finance the remaining $80,000 (80%). The house decreases in value by $10,000 to $90,000. What's your return on invested capital? Hint: IT'S NOT -10%. Your return is -$10,000 on $20,000 of invested capital, which is a -50% return (-$10,000 / $20,000 = -50%)
Advice for Those Considering Retirement
Based on my experience, here are 3 tips for those considering retirement:
1. Focus on what you’re going to, not what you’re trying to get away from
*Waiting for your life to suddenly improve because you're no longer working? It rarely does. Focus on what gives you purpose today.
2️. Develop your identity outside of your job
*Is it your spiritual life, your family, a hobby, or a non-profit organization? Spend time actively developing those areas. See if you can gradually scale down your job involvement or take a "mini-retirement" to see how it goes.
3️. Create a new routine
*Too much discretionary time is rarely a good thing. Develop a routine with goals and deadlines to stay focused on what's important to you.
Retirement is typically a thing you only do once, so hopefully these tips are helpful in making a smooth transition and retiring well.
What else would you add to this list?
Teaching Children About Money
Looking for a creative way to talk to children about money?
A client scheduled a visit with me and their high-school aged child to talk about finances.
We discussed how to prioritize giving, saving, and then spending... in that order.
A few other topics included:
-Compound interest
-Starting early vs. starting later
-Financial stewardship
-Setting goals
Toward the end of the visit, I asked the high schooler about a current goal and the answer was to be rich.
I politely responded that being rich is a state of mind, not a bank account balance.
Clients, if you have a friend or family member who could use an extra nudge, I’m open to visiting with them. If they’re important to you, they’re important to me.
If I’ve learned anything from parenting, it’s that I can tell my children the same thing 100 times and it doesn’t sink in until they hear it from someone else.
Rocket Launch & Net Worth
What do the stages of a rocket launch and building your net worth have in common?
More than you think!
A rocket launch takes a tremendous amount of energy to simply get the ship moving. It's a battle against inertia (AKA changing trajectory). The same applies when building net worth. There is often inertia from things like:
-Personal debt
-Student loans
-Vehicle loans
-House payments
-Bad financial habits
The good news is that for many, the journey gets easier. There is less drag from carrying the extra weight and less energy is needed to keep gaining momentum. Building net worth tends to become substantially easier when you have compound interest work in your favor rather than against you!
Tracking Net Worth
Why do I recommend tracking net worth?
Because it's been one of the best motivational tools to help clients deal with the daily grind of managing their finances.
Tracking net worth also helps monitor whether we're on pace to hit financial goals.
In this example, we show a couple who is around 55 years old and we've tracking net worth for the past 5 years. In that time, they've nearly doubled their net worth.
Another way of looking at this scenario: In the last 5 years, they have added about as much to their net worth as they did in the previous 50 years!
Best of all, they're right in line with where we anticipated they would be relative to their goals.
How did they do it? By setting financial priorities, paying themselves first, and by having an investment plan.
Financial planning is a marathon, not a sprint. What do you do to stay motivated?
Donor Advised Fund
What is a Donor Advised Fund and who can benefit from it?
In essence, a Donor Advised Fund is an account managed by a charitable organization. It gives the potential for a tax write-off now, with the ability to gift to specific charities later.
Some examples of those who may be able to benefit from a Donor Advised Fund include:
*Someone near retirement who wants to prefund giving
*Those currently experiencing higher than normal income years and looking for current tax deductions
*Receiving a sizable business buyout that created extra taxable income
*Owning investments in a taxable account that have substantially appreciated in value. Those investments can be gifted to the Donor Advised Fund for a potential tax write-off rather than sold and be subject to capital gains tax
*Alternating years of charitable giving to qualify for an itemized tax deduction, or a strategy known as “bunching” charitable gifts
Bottom line: if you're going to give anyway, you may as well maximize your tax deduction!
Holding the Bag
Have you ever heard the phrase of being “stuck holding the bag”?
It's a position you generally don't want to be in, especially when it applies to investing. Chances are, if everyone is talking about it, the move higher has already happened.
The trouble is, there is no way of knowing if/when the crash is going to happen.
Have an investment strategy, stay disciplined, stay diversified, and don't get stuck holding the bag!
Value of a Checklist
What's the value of having a checklist?
Approximately the amount of time/cost/frustration you'll save by not forgetting something important!
I also learned my lesson that a checklist is only as good as the items you have on it. My intention was to make a checklist of items for ice fishing.
Unfortunately, I forgot a very important item on the list... my fishing poles.
Thankfully I have good friends a bait shop near the lake, so we made it through the afternoon and managed to catch some fish.
A checklist is something I've used for a long time when gathering information for financial planning. I've gone over that checklist many times and refined it to include the important items. Frankly, I'd much rather face a frustrating afternoon on the lake than forgetting important items for a client's financial plan.
How Is Your Relationship With Money
How is your relationship with money?
Solid? Shaky? On-again, off-again? Complicated? Or are you on a break?
Relationships with money tend to be a learned be a learned behavior, meaning it's likely the result of the people around you. Those around you will likely shape your internal belief system.
For example, if you think:
-I'll always have a car payment
-I'll never pay off my home loan
-I can't afford to save money for retirement
Chances are, that will become a self-fulfilling prophecy and you'll consciously or subconsciously make those beliefs come true.
An alternative is surrounding yourself with those who have a positive money mindset to reinforce your own belief system and help make positive choices.
Just like any other relationship, your relationship with money takes effort. If you're not satisfied with the results you're getting, there's no time like the present to start making changes.
5 Years in Business
Today, I am celebrating 5 years of business!
Reaching milestones can be a great time to reflect on what's gone well and what lessons were learned.
Here are 5 lessons from the first 5 years:
1) Network, network, network
2) Surround yourself with great people
3) Continually ask yourself the question, “Am I running the business, or is the business running me?”
4) My business is only as successful as the clients I serve and problems I solve
5) Having a healthy financial foundation was key
Thank you to all those who have been involved in some way, and I look forward to what's next!
Farming, Technology & Business
Here's one thing you probably didn't know about me...I grew up on a farm.
So I've witnessed 30+ years of innovation in farming. Embracing technology has been incredibly important to those family farms that have survived and thrived. You either embrace technology, or you don't.
Farming, like so many other businesses, tends to do one of the following:
*Go big (gain economies of scale)
*Go niche (focus on a specialty)
*Go extinct
It's been great to partner with LPL Financial and their ability to provide integrated technology to make a great advisor and client experience... because I have no intention of going extinct any time soon!
Veterns Day
What is one of your most valuable assets? TIME!
Which is why I believe it's so important to say, "Thank you" to all the brave men and women who have volunteered their TIME to serve our country.
Veterans: I appreciate you, respect you, and will do my best to take care of you.
Happy Veterans Day!
Focus on the Things you can Control
Going back to #TheOffice for tips on how to emotionally prepare for the results of the #election2020
Another, possibly more practical way, is deciding where to focus: the intersection of what you can control and what matters. (Thank you Carl Richards for the sketch!)
*Get educated on the issues
*Vote
*#SurrenderTheOutcome
Do Elections Impact Markets
Who will win the election? There's an interesting data point that has accurately predicted the winner of the Presidential election in 20 of the last 23 elections, which is being correct about 87% of the time.
What is the data point?
The value of the S&P 500 three months prior to the election and comparing it to election day. If it's higher
the incumbent party usually wins. If it's lower the opposing party usually wins.
The number to keep in mind is 3,294.61 which was the S&P 500 closing value on 8/3/2020.
Election Season
Michael Scott gives a glimpse inside the mind of every politician out there right now....
"I do want the credit without any of the blame"
What's the dirty little secret no politician wants you to know?
Investment returns have a lot more to do with current business cycles than which political party is in control
A few things to keep in mind:
Markets are actively pricing in any new information, including potential outcomes of the election
Regardless of who wins, roughly 1/2 of the population is going to be upset their candidate did not win
The Simple Key to Financial Success
The key to financial success is remarkably simple...
But there's a big difference between something being simple, and something being easy to accomplish
Weight loss is simple: expend more calories than you consume
Getting enough sleep is simple: go to bed on time and wake up on time
So what is the simple formula?
Use your income to buy assets that tend to appreciate in value and/or produce income
Do you have an example of something that is simple, but not easy?
Social Security Statement
Have you ever read through your Social Security statement?
There is some wording that I find... interesting
For example: "On average, Social Security will replace about 40% of your annual pre-retirement earnings. You will need other savings, investments, pensions, or retirement accounts to make sure you have enough money to live comfortably when you retire."
Also note that every stated benefit has an *asterisk next to it. That asterisk reads: "Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2035, the payroll taxes collected will be enough to pay only about 79% of scheduled benefits.”
Consider yourself warned! Are your projected benefits on track for what you'll need? We can help answer that question.
Fiduciary
What is a fiduciary and why should you care when it comes to financial advice?
Simply stated, a fiduciary is required to act in the best interest of the client.
What does that mean when it comes to giving financial advice?
The fiduciary standard requires the investment advice to be in the best interest of the client, while the suitability standard only requires that investment recommendation is suitable, but not necessarily the best, for a client.
Which is why your financial advisor's licensing, registration, and credentials are important.
That's one reason I’m registered as an Investment Adviser with the SEC, which requires a fiduciary standard for investment advice.
It’s also a reason I’m a CFP professional, which includes a fiduciary duty at all times when providing financial advice to a client.
Not every financial advisor is acting in the same capacity. Know the difference!
Lifestyle Creep
What is lifestyle creep?
As income increases expenses tend to increase at a similar pace. Things that were once a luxury become a necessity.
In my experience as a financial advisor, I have seen some people handle lifestyle creep better than others, but have never met someone immune to the effects of it.
What's the warning?
Increasing your income isn't likely to fix a spending problem. And increasing spending isn't likely to fix a happiness problem.
Be in control of your money rather than letting your money control you.
Purpose of Insurance
What's the purpose of insurance in your financial plan?
Spoiler alert: insurance is NOT an investment. If you're confused about the difference, we need to talk.
Insurance is a risk management tool
Our goal is to find a balance that both fits your budget and protects what matters.
Tax Evasion & Tax Avoidance
What's the difference between tax evasion and tax avoidance?
Jail time.
Tax evasion is illegal. Don't do it.
Tax avoidance is perfectly legal. Embrace it!
Efficient tax planning may allow you to keep more of your income and reduce the tax-drag on your finances. That's why we incorporate tax strategies in our planning process.
Mission Statement
Why did I become a financial advisor?
Because of my own experience trying to find financial advice. It felt more like a product sales pitch than someone genuinely interested in my wellbeing.
Which is why I started my business with the belief that your financial plan should be built around stewardship, not salesmanship.
Investing in Times of Uncertainty
Should I invest in times of uncertainty, or wait until the news gets better?
Simple tip: If you are waiting for some good news from the media to invest, you're probably doing it wrong!
Pro tip: Make your investment decisions in the context of a broader financial plan.
What is the Size of Your Ship
I was recently on a conference call with some local business leaders. We were discussing recent events and spent some time on the topic of empathy. We discussed an analogy of being in a ship at sea when a storm hits. Suddenly the size of your ship becomes a lot more important when the winds pick up and the waves start crashing. The reality is we’re all going through a similar storm, but we’re not all facing the storm in the same size ship. Are you facing the storm on an aircraft carrier, or a 14’ fishing boat? There’s a big difference. The analogy was a good starting point toward empathy, and realizing events hit us all differently. My takeaway was that we can’t control the size of the storm, but we may be able to control the size of our ship. I relate the size of your ship to your personal capacity. How well you can manage risk and uncertainty? How well can you manage personal and business cash flow? Do you have an emergency fund? What are you doing to manage stress? How have you invested in personal growth and development? What are you doing to challenge yourself to try new things or master existing skills? These are things that take time to develop, so we can’t expect an immediate change in the middle of the storm. However, I believe you can grow your ship for when the next storm hits. And there’s no time like the present to get started.
Calm is Contagious
Calm is contagious. It’s a phrase I’ve heard many times, especially from Navy SEALs who have trained to be put in some of the most challenging situations imaginable. Whether you’re leading a business, a charity, your friend group, or your family, those around you are going to take their social cues from how you react. Just like being calm is contagious, so is panic and fear. It’s an incredibly important time to choose which behavior you want to display. So remember, your attitude and reaction matter to those around you. Calm is contagious.
How Will you be Impacted
I was recently asked the question, “How do you see people being impacted by the recent economic events?” In most cases, it’s either viewed as a threat or an opportunity. That seems to apply whether it’s your personal finances or your business. We’re being faced with perhaps one of the greatest challenges in recent memory, but also one of the greatest opportunities. There will be winners and losers out of this. What will separate the two? I suggest that will largely be answered by how quickly you can adapt to the changes. We’re all faced with a choice of whether we sit back and wait for someone to bail us out, or take action to be in a better position going forward. If you’re curious what that may look like, please send me a message, e-mail, or call and we can talk more about opportunities that may be available for you.
It's Different This Time
A very dangerous phrase I’ve heard lately is: “It’s different this time”. The reality is humanity has faced major crisis since the beginning of time. It tends to feel different when you’re in the middle of a crisis, and it’s often difficult to see to the other side. However, the thought process of being “different this time” may lead to poor decisions in both times of prosperity and turmoil. While the circumstances may be different this time, human nature is not. Our human nature contains things such as: greed, fear, ambition, self-preservation, trust, confidence, and many other emotional drivers. And it’s our human nature that ultimately drives the markets. Unless human nature has changed, I have no reason to believe that it will be different this time.
Faith vs. Fear
I’d like to talk about an emotion that many of us are feeling right now. That feeling is fear. Fear, like all your feelings, is valid, for no other reason than that it is the feeling you’re feeling at the moment. It is perfectly OK to feel fear. It is never OK to give in to the fear: to do what fear is telling you to do. Fear is the opposite of faith, and one always drives out the other. So my challenge to you over the coming weeks is to simply ask yourself, am I making this choice out of fear, or out of faith?