A Short Cut to Making Money Plenty
The Art of Making Money Plenty in every Man’s Pocket, by Doctor Benjamin Franklin hangs in my office. It’s a frequent reminder of the simplicity of building wealth and security in today’s complex world. The full text reads:
At this time when the general complaint is that money is so scarce it must be an act of kindness to instruct the moneyless how they can reinforce their pockets. I will acquaint all with the true secret of money catching, the certain way to fill empty purses and how to keep them always full. Two simple rules well observed will do the business. First, let honesty and hard work be thy constant companions; Second spend one cent less every day than they clearly gains. Then shall thy pockets soon begin to thrive, thy creditors will never insult thee, nor want oppress, nor hunger bite, nor nakedness freeze thee; the whole hemisphere will shine brighter and pleasure spring up in every corner of thy heart. Thereby embrace these rules and be happy.
Short Cut to Making Money Plenty?
So often we want to short cut these very simple principles. In our complex world of credit default swaps, FANG stocks, and seminars on flipping houses, many seek out the services of a financial planner to find the next hot investment scheme that will make them rich with little effort, a tax strategy that will significantly increase their take home pay, or an account that will guarantee high returns with little risk. Another new trend is young retirees making enough money off of a website or blog to afford a life of around the world travel and leisure. Since our society is so connected and we are bombarded with a 24-hour news cycle, it can be easy to see stories like these and feel like you are falling behind or missing out. It may also seem that money can indeed buy happiness.
We hear these concerns from clients. And while we have many more tools available to maximize wealth than the two identified by Dr. Franklin, financial planning at its core always comes back to the elegant simplicity of income minus expenses. The beauty in his words are that they don’t advise on the amount of either. He doesn’t say that you should work as a stock broker, invent an App, or work in a job that makes as much money as possible. He also doesn’t advise giving up your daily coffee habit, never leasing a car, or investing in real estate as many financial pundits do. The advice is timeless and amounts insignificant.
Income Doesn’t Matter As Much As You Think
As financial advisors, we see this simple formula work for or against clients on a regular basis. What is always surprising to me, is that the income part of the equation matters very little. I have worked with people of modest professions like teachers, police officers and nurses who have built significant wealth. They are now in a position to generously support their favorite charities and assist with their grandchildren’s college education. I have also worked with those in higher paying positions who make six figures a year while having little savings and living nearly paycheck to paycheck. These cases are the hardest because they require not only a reality check, but also behavioral changes to build a healthy financial position.
Finding the correct balance to the income and expense equation allows more complex financial planning strategies to be applied to help your money grow efficiently. This maximizes not only return on equity, but return on life as well.
Most Read IRIS Articles of the Week: March 19-23
Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, March 19-23, 2018
Click the headline to read the full article. Enjoy!
Let’s pretend you are a US investor that wants to deploy some of your money overseas. You think international developed market stocks are attractive relative to US stocks, and you also think the US dollar will decline over the period you intend to hold your investment. — Chris Shuba
I had a chat with The Financial Times the other day, and provided lots of background as to why I don’t think cryptocurrencies are the choice of criminals. The comment that was reported was the following ... — Chris Skinner
During the tumultuous red and green gyrations of the capital markets this year have your clients anxiously called to ask: “What’s going on with my portfolio?” What do you do when the usually smooth ride in your luxury automobile becomes as bumpy as Mr. Toad’s Wild Ride in the Happiest Place on Earth? What does the average investor do? — Ted Parker
Inflation is a bad thing, right? It make things more expensive, right? For those of us of, let’s say, a certain vintage, we recall the runaway inflation of the late 1970’s and early 1980’s. So why does the Federal Reserve – in charge of managing the country’s currency and value thereof – actually try to create inflation? It’s called the inflation targeting and it matters to your money. — Bill Acheson
As you near your 60’s, your prime earning and saving years will transition into a period of time where you get to enjoy the “fruits of your labor,” a.k.a retirement. We call this segueing from accumulation to decumulation, the period when you will be drawing from your accumulated nest egg. — Dana Anspach
Exchange traded funds (ETFs) are popular vehicles for market participants looking to engage in thematic investing. Thematic investing looks to take advantage of future growth trends, including disruptive technologies. Given that forward-looking approach, stock-picking in the thematic universe is equally as hard, if not harder, than in traditional market segments. — Tom Lydon
It’s not enough for your salespeople to be product experts, they also need to be capable of having the kind of conversations that position them as business experts and even strategic resources. — Lisa Rose
Business growth doesn’t come from wishful thinking. As you know, it takes a lot of hard work. The growth of your business is not an option – it is a necessity. Coordinating the right mix of strategies to gain market share and improve client acquisition rates is essential to advance your firm in today’s economy. — Michelle Mosher
It’s undoubtedly true that investors’ financial security is no laughing matter, and this is reflected in the stolid, dour, reliable imagery and branding that is, by and large, the industry standard. This is hardly surprising—investors need to believe they’re placing their hard-earned money in the hands of experienced, trustworthy professionals. — Alexandra Levis
The number one question advisors ask when exploring a move to independence is how the economics compare to accepting a recruiting package from a major firm. It’s certainly a valid concern, because while the recruiting deals being offered by the wirehouses are down, it is still very possible for a top advisor to get a really attractive hard-to-pass-up offer. — Mindy Diamond
Municipal bonds might not be the first thing that comes to mind when you think of a sexy investment. They don’t typically command news headlines like the stock market or bitcoin. — Frank Holmes
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