Four Steps Towards Financial Independence

Most investors obtain their understanding, (or misunderstanding), about personal financial issues from heavily biased sources (like investment providers). There is a better way, where your financial health is concerned. Here are four specific steps that will improve the probabilities of success.

  1. Commit to learning about financial market history and the academic findings, (evidence), which constitute market science. Substantial and wide-ranging research has been done on financial markets for many decades and this research has clearly identified four specific risk dimensions. These dimensions, (stocks versus bonds; the size of companies; relative price; and profitability), constitute the origin of investment returns. Wall Street mostly ignores the research and instead focuses on trying to outguess and out-time the market. Don’t fall for it.
  2. Learn where your money is going. Many of the clients we see only have a vague idea of what they spend each year. Don’t be deluded into thinking that you are spending “x”, when in reality you are spending “2x”. Track your spending for a year using a tool such as E-Money or Mint so that you know how much you spend versus how much you save. Remember, if your savings are paltry, your long-term financial future will be as well. As we often repeat, “Inputs determine outcomes”.
  3. Do Something – Thinking about taking action steps means nothing unless and until these steps are placed into action. There is often a gap between good intentions and what actually takes place. Perhaps more than any other variable, those who do something are usually far better prepared for the future than others.
  4. Find Help – You simply won’t make progress towards financial independence by relying on product driven, sales oriented “advice”. The Council of Economic Advisers has estimated that relying on biased product salespeople, (instead of advisors), costs retirement plan investors more than $17 Billion Per Year in Excess Charges.

Let us know how we can help. Ready for a real conversation?

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