One of my favorite Warren Buffet quotes is, “Lethargy, bordering on sloth should remain the cornerstone of an investment style. This year we neither bought nor sold a share of five of our six major holdings.” The second richest man in the U.S. is advising us that investing should be boring. Basically, he wants to remind us that there are two major factors to achieving success. The first is time. The other is allocation. Both of which are on your side. And considering his successes, mimicking his investing style probably isn’t a bad idea.
For me as a CERTIFIED FINANCIAL PLANNER™, I may know the dos and don’ts when it comes to investing. However, I also know the power of emotions—the overwhelming fear that grips your guy when you watch your life’s savings plummet. And for that very reason alone, when it comes to my own personal investments, I still look to others for guidance. That’s why I hired a CFP® to handle my personal affairs a long time ago. I, too, need to be reminded of my long-term goals. Otherwise, emotion, not impartiality, could play into the decisions and I would no longer be working toward achieving what I set out to do.
So as you dive into the investing world, you want to keep those two aspects mind when you building your portfolio. Your asset allocation should match your risk tolerance and line up with your long-term goals. This is where your CFP® comes into play—once you’ve built that pie chart, they keep you (and me) from deviating from that strategy, no matter what kind of market turmoil we’re facing. The best advice a true wealth manager can give you is, to tell you to do nothing.
That is how you stay on track—even though it is exactly the opposite of what your emotions scream for you to do. Far too often our emotions contradict reality, especially when it comes to our money. A planner helps you stay the course even when the market moves you. They will challenge you to take a good hard look at your choices. Then dare to question why you’re making changes—especially ones that don’t line up with your initial plans.
If you’re having trouble staying on course, feel free to contact us. Our goal is to help you make your life financially simple.