The Illusion of Solutions

So much time and energy are needlessly expended every day trying to intellectually solve what is not solvable. Investors and indeed most “advisors,” accede to the illusion of solutions, best answers, and strategies that seek “certainty.”

The grand majority of insurance and investment products are marketed as precise solutions to very specific  financial maladies. Annuities are sold to protect principal; hedge funds are marketed as vehicles to decrease risk; tax free bonds are offered as a way to lower the tax burden on investment income.

In most instances, insurance and investment products like those just described are really just charging premium prices for the illusion of “certainty.” These “solutions” are primarily aimed at trying to lessen the scary price variability inherent in investing. The trade off is these “solutions” end up contributing to the main dilemma facing investors, which is investing in a way that keeps pace with ever increasing living costs.

Understand this, thousands of financial producing marketers are well ahead of you and have crafted the “perfect solution” to the most pressing issue of the moment. Investors clamored for safety of principal after 2008 and Wall Street gladly provided expensive and complicated solutions in the form of annuities. After a few years of a bull market in stocks, these same product peddlers pushed “alternatives,” (again, very expensive and complicated.) They have an endless array of “solutions.”

Remember, investing and financial planning don’t revolve around quantitative questions. In reality, what matters most are qualitative issues. Life is more than numbers. Don’t fall into the “solutions” trap. Ready for a real conversation?

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