A couple of years ago, a client of mine recommended a book, “The Psychology of Money.” It is written by a former Motley Fool writer, Morgan Housel. Its content is far more interesting and palatable than the title may suggest. It has sold over 1 million copies and is translated to over 30 languages. It is full of anecdotes or reframes of financial concepts that often hide in plain sight. My client and I decided to read this book and we did a book review after the fact. Through short stories (no math, I promise!), Housel uncovers the strange ways people think about money and he revels a solid argument for having long-term financial goals along with a Financial Plan.
Recently in his blog, Morgan Housel said: “However crazy the world looks, it can get crazier. History is just a long story of the unthinkable happening, precedents being broken, and people reading the news with bewilderment and denial.”
You don’t have to look far to find the crazy now. Just turn on the news. In a matter of days, the US and other nations as well as corporations like Apple and Netflix have excommunicated Russia from the world stage. McDonald’s is even closing its Russian franchises. Meanwhile, gas prices have skyrocketed and energy prices in Europe push them closer and closer to a recession. In the US, we saw the annual inflation rate accelerate to 7.5% in January 2022 – the highest we’ve seen since 1982.
In crazy times like this, it’s important to maintain perspective. To step back and look at the big picture. To prevent ourselves from ill-timing the market by jumping off the roller coaster and taking a loss. I applaud all of our clients. In my opinion, you are all better than the average investors and you keep that perspective.
If you’ve read this far and if you are a client with our firm, I have 2 offers for you… First, if you would like a copy of The Psychology of Money, please contact Angel or myself and let us know. We’d love to get it for you. Second, if you don’t have a financial plan on file with us, we want to change that. Reach out to one of us and ask for our “Homework Sheet” that has information we need from you to get started on a comprehensive financial plan. Lastly, if it’s been a while since we’ve reviewed it, let’s dust off the ole’ financial plan and go over it in our next review meeting.
If you are not a client with our firm, I encourage you to go over your financial plan with your advisor on a regular basis or talk to us about getting one started. A Schwab study found that 65% of people with a written financial plan feel financially stable and confident, while only 40% of those without a plan feel the same level of confidence. Source: www.schwab.com/resource-center/insights/content/does-financial-planning-help.
Equally as important as having a Financial Plan (or perhaps more-so), is having an Estate Plan. After your passing, a great financial plan can be jeopardized without proper estate planning. Whether you are a client with our firm or not, we invite you to attend our upcoming workshop on Thursday, May 19th on Estate Planning. For more information on this and future events, click here. RSVP to Angel and we’ll add you to the list.
One important step on getting your estate in order is reviewing and updating your beneficiary designations. If you have a Schwab account you can check and update both your beneficiaries and trusted contacts under the Service tab when you login to Schwab. A trusted contact is someone that we can contact on your behalf to address any concerns or issues related to your account if something happens to you. However, they will NOT be able to view your account, make changes or execute transactions.
Thank you for reading this and enjoy the early signs of Spring!