Overheard in Starbucks …
“When I step out of my office at the end of the day, I’ve completed a leg in a very important race in my life. But when I step over the threshold of my home, I’ve begun a leg of a far longer and much more important race.”
365 days to your richest life: day 7
Wherever you are on the income/asset scale, for the next 24 hours, think like a prosperous person.
If you have a moment of anxiety about financial issues, tell yourself that “All my needs will be met abundantly and with ease.” Each time you feel a jolt of anxiety, say it again. Say it until the jolt of anxiety goes away for good, or at least for today.
Figure out roughly how much you earned today, after deductions, and go online and open two new accounts within your primary bank account, one for saving and one for contributing to your community, church or cherished cause. Put 10% of your net earnings for the day in each account — see how good that feels? Try it again tomorrow, and the day after that.
Think about where you’ll be at this time next year: free of anxiety about money, with 10% of your net income saved for the purpose of bringing your dreams of the future to fruition, and an active, powerful force for good in the world.
Note: if you have high interest credit card debt that you can’t afford to pay off monthly, dedicate your 10% savings to paying off your highest interest credit card (on top of the minimum payments you’re already making. Once that’s done, start on the next-highest interest card, and so on, until you can begin saving for yourself. No less than the person with $100,000 in the bank, you’re on your way to freedom, one day at a time. Take the right step every day and the destination becomes inevitable.
If a bill comes in, celebrate the opportunity it give you to participate in the commercial flow of your community. Pay it promptly
365 days to your richest life: day 5/6
Whether you want to manage your own investment portfolio, or simply have more informed and knowledgeable conversations with your adviser, it is really very easy to find out as much you need to know. (’Knowing’ isn’t the only component of successful investing, but we’ll get to that later this week.)
In the meantime — if you’re ready — here are the ONLY links you’ll need:
To buy stocks and index funds (if you don’t know what an index fund is, you can find out on the site) and learn how to evaluate stocks, visit Canadian Shareowner.
To learn how to create a solid, long-term, diversified, low-cost portfolio in only 20 minutes per year, learn about the Couch Potato Portfolio at Moneysense.
Can it be this simple? Absolutely.
365 days to your richest life: Day 4
You may be beginning to notice those posts are rather random. My intent is to give you something to think about each day, a thought that will — in application — increase the quality of your life through greater financial wellbeing.
Today I’d like to pontificate on the subject of investment, and though I’m hoping I can do that succinctly, I have a bad feeling this may take a while.
Twenty years ago, I believed — as you probably do today — that brokers, financial advisors and planners were professionals whose job it was to identify profitable investments. Then I spent 20 years working with the same — oh, wait, I was one — and found that it is truly impossible to identify those investments that will perform better than average in advance. That may sound like sour grapes, and perhaps it is, but the aha moment for me didn’t have anything to do with my own clients. (Perhaps the good news is that even vaguely competent advisors can generally, if they choose, keep their clients out of the worst investments.)
On the fateful day, I was doing some reorganization of my senior partner’s client files. With more than 25 years of experience, this fellow was very intelligent and informed and cared deeply about his clients. He spent hours each week using the latest analytical tools to identify the best-performing mutual funds, and then recommended them to his substantial client base. Going through those files, I realized I could tell what year each client had joined his practice by the mix of investments within their portfolio. I also realized, more upsettingly, that almost none of those investments had performed as well the year after they invested as they had the year before.
In the years since, I’ve become very clear on the fact that the investments that performed well last year are likely to be this year’s dogs, and that most advisors do not have the sales magnetism to persuade new clients to invest in last year’s underperformers.
The sales process is, in other words, at odds with the very foundation of investment success.
As disturbing as that is, there is some excellent (not just good) news in all of this: the value of financial planners, advisors and stock brokers is not in their ability to choose next year’s best-performing investments. What is their primary value? Well, for that, my friends, you’ll have to come back another day.
365 days to your richest life: day 3
It is a stormy night here in Vancouver (dare I say ‘dark and stormy’?) and my wind chimes are making beautiful music.
I had an interesting interview with a financial planner today, and we talked about the importance of cash flow management for people in the 25- to 46-year-old range. I agree wholeheartedly with his premise that understand how much you’re netting (that is, how much money lands in your bank account after deductions) versus how much your spending is the crux of long term financial peace, but it made me think, too, about how easy it is to spend.
I had dinner with someone I love recently — she’s 20, working in a low-paying job, and already in debt to a credit card company. (To the credit card company, by the way — that’s unconscionable.) As she said, it’s her fault — but in our society, blaming someone without financial maturity for wracking up available credit card debt is akin to blaming toddlers for eating the candy that Grandma leaves on the coffee table.
We spend to feel better. We spend to eat when we’re far from home or have no food in the pantry that’s readily prepared. We spend to feel stylish and well-turned-out at work. We spend because our friends are spending, because all those advertisements promise us happiness, beauty, youth and that we’ll smell better. We spend because we don’t have time to think.
Then when we overspend, some talking head will tell us it’s because we’ve made bad decisions. Oy!
If you’re outspending your pay cheque, or not accumulating the financial resources you need to fuel your dreams, forget about will power. Forget about discipline. Do you honestly thing that will power and self-discipline has a breath of a chance in the face of $41 billion a year in annual advertising spending?
But there is a way — you simply have to find those things you love more than the gratification of spending. First, find your joy. If you’re overspending, it is quite likely because you aren’t finding enough pleasure in your life. Think about what you love, and make a list of three things you love to do that don’t cost money — then carve out some time to do more of that. Pleasure and relaxation are necessities to us humans, and without them, we will self-destructively use whatever is at hand to stimulate those synapses. (If you love to shop, consider joining your local Freecycle, or visit a thrift store a few times a week to find what treasures the universe has in store for you there.)
Second, just as staying away from fast food restaurants is job one when working toward a healthy body weight, stay away from advertising. Instead of watching TV, record the shows you can’t miss on your VCR and then speed through the ads. Visit your library to rent DVDs and videos. And whatever you do, stay away from magazines, which are just catalogs with articles thrown in to confuse us while making us feel that perfectly normal thighs are humongous tree trunks.
365 days to your richest life: Day 2
In 20 years of studying the financial markets and personal financial planning, the advice that I find myself thinking about is simply that: Think.
I can’t remember where I read it, but it referenced the subject of spending less and saving more, and it was simple enough to be frustrating to today’s wisdom seekers. Think before you buy.
Wherever we land on the income/net worth scale, it is likely we can acheive greater satisfaction and a richer life by thinking before we buy. In my workshops for people wishing to heal their income/expense ratio, I recommend finding six things in your home that you regret buying. (Start with your clothes closets.) Write them down, along with their approximate price, on the back of a business card. Use an elastic to attach that card to your credit card, or just place it in a prominate place in your wallet.
For purchases over a certain amount (for me, it’s $20, but for some of my clients its been as high as $200) give yourself a 24 hour cooling off period. You’ll be amazed how the infatuation wears off in as little as a day.
Remember, restricting your purchases to items you love and that will serve you well for years to come is good for your financial wellbeing, it’s good for the planet, and it leaves space in your life for the beautiful and useful. Storage and organization aren’t the problem, folks — it’s the mountains of stuff we’ve accumulated.
The most important number you don’t know …
“The world has serious consumption problems, but we can solve them if we choose to do so.”
An anomalous year provides a glimpse into the brokerage industry
Customers, Not Brokers, Profited in an Odd 2007
Last year, many ordinary investors did reasonably well. The brokers did not. How could that happen?
Technical glitches
We’re having difficulty accessing uploaded files, so if you’re trying to access the PDF exercise ‘Navigating the Human Heart’ you’ll receive an error message. I’m working with my service provider to overcome the technical gremlins, but in the meantime, please feel free to send me an e-mail at admin@richestlife.org and I’d be happy to e-mail you the PDF.
365 days to your richest life: day 1
A whole calendar of brave new days lies before us, and it is so tempting just to enjoy this quiet time now and stumble in blindly tomorrow. But every day is also a new opportunity to make room for something richer than the place we inhabit today — and it would be a shame to let that opportunity pass.
Today I invite you to think about the one thing — the one thing that would make a tremendous difference in the quality of your life. It might be a money issue, or a relationship issue, or even a health challenge. Whatever it is, it is defined by its essential nature — if you could change this one thing, life would be better. This change offers freedom — its realization will fill you with new energy for creativity in this and every other area of your life.
I invite you to create a space in your life for this change to occur. If you believe in a God, spend a few minutes each day praying to that God with certainty: “God, I know that you love me and want me to reach my highest potential. I’ve identified an obstacle, and I know that you’ll send me what it is I need to overcome it.”
If you don’t believe in a God that you can pray to, send the same message to your unconscious: “I know I have the creativity, wisdom and energy to transcend this obstacle. I know that with enough perseverance and faith in myself, I can transcend this obstacle and realize my dreams.”
Carry these prayers or affirmations on a card in your pocket, tape them to your bathroom mirror, and say them as often as you can until you realize that something has changed.
The change may be out there, in the external world, or just as powerfully, it may be a idea or change of viewpoint that allows you to see about or around this obstacle to your next right step. Whatever it is, it will free you to move into your next stage of evolution.
By the way, if can’t identify an obstacle — and assuming that you are not living in bliss each moment of every day — make that the obstacle you wish to overcome. Identifying your obstacle is your current path to freedom.