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Are You Winning One Time or Building a Sustainable Future?

Financial Planning

Is your financial life sustainable? If you’re focused on the short-term and achieving one goal at a time, that’s not necessarily repeatable or sustainable.

Lots of worthwhile goals are aimed at accomplishing something one-time. For instance, you might have a goal to lose a certain amount of weight or save a specific amount of money. After you’ve reached these goals, in many instances, the goal disappears.

How to Stabilize Your Financial Life

In order to create a financial life that’s sustainable, you need systems that support ongoing, repeatable goals. These systems are part of what you should see in a well-designed financial planning decision making framework.

1. Plan

The use of the verb planning is intentional. Financial planning is something distinct from a one time financial plan. Your financial life consists of hundreds of financial decisions made over time. Your choices are ongoing.

2. Create a System

Systems for how to save, where to invest, and when to establish financial priorities are among the list of inputs needed for building a sustainable financial life.

One of the most important parts of the system is a mechanism that helps you minimize errant emotional impulses. You can’t totally eliminate emotions from having an impact, but a good decision-making system can help you keep emotions from being the dominant determinant.

Hundreds of times over the years clients have asked me about some investment or financial strategy far outside their planning system. When I guide them back to their specific situation and ask how the investment fits into their goals, they say it doesn’t. Here’s the answer. If it doesn’t fit your system and your goals, then move on.

3. Embrace Risk & Stay Disciplined

It seems that in times of heightened uncertainty, investors look extra hard for ways to obtain returns without risk. Over the long-term, risk and return are related. You likely won’t find the key to a sustainable financial future with investments that don’t fit your circumstances.

Creating financial sustainability pre-supposes that you don’t confuse falling prices with rising risk. Markets go on sale from time to time; that’s part of the stock market cycle.

Discipline in terms of regular portfolio rebalancing and avoiding the ever tempting impulses of the daily market will help build sustainability in your financial life. When uncertainty is high, discipline matters most.

Sustainability pre-supposes that most of your decisions will contribute, not subtract, from your financial future. Every decision doesn’t have to be great, it just can’t be terrible. Avoiding big mistakes is critical.

4. Don’t Panic

In my experience, most big mistakes originate from fear. Fear is one of our innate human emotions, but it’s easy to translate the protective element of fear into avoidance.

Author Nick Murray recently wrote, “The market is inviting you to make the big mistake. Consider declining the invitation.” Pulling the plug on your investment portfolio likely fits into the definition of the big mistake. Accept that uncertainty is the cost for the opportunity the market provides.

I heard an interview recently with a female CEO and she told her daughters “you can’t just save your way to wealth, you have to invest.” This rings true. Saving money is the first part, but investing your savings is the equally important second part of the wealth equation.

5. Focus on the Future

Don’t just focus on the present market environment, invest for your future and let long-term market history be your guide. Start there. Ready for a real conversation?

Disclosure

Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.