The Big Financial Story No One is Talking About
The big financial story next year is likely something that’s barely on the radar this year. Surprises and unexpected events are always part of the overall financial planning process and they’re nearly impossible to know in advance.
Uncertainty, volatility, and shocks should be expected, but the rub is you don’t know exactly when, how, and why. One of the most important financial skills that you can develop is resiliency in the face of uncertainty. One effective way to bolster the resiliency of your “financial immune system” is by having a cohesive financial planning philosophyThe best way I know to bolster the resiliency in your “financial immune system” is by having a cohesive financial planning philosophy.
Elements of an Effective Financial Planning Philosophy
You probably already have a general life philosophy that helps you navigate life’s twists and turns. A financial philosophy can guide you through investment decisions and broader financial issues.
Clear Values
Your financial philosophy should be directly connected to your aspirations and values. This planning philosophy needs to center on why you are investing, your overall timeframe, and how you plan to reach your goals.
Reasonable Expectations
A reasonable set of expectations for your personal finances should be a byproduct of having a cohesive financial philosophy. This is important because when reality differs from expectationsThis is crucial because when reality is less than what you expect, a host of negative emotions can push you to make hasty choices. Well-formed expectations help to protect you from the inevitable surprises and market volatility.
Unwavering Commitment to Your Plan
Big stories and themes change every year. If you allow transient events to dictate your financial planning decisions, you’re pursuing short-term not long-term goals.
If you have a solid financial planning philosophy you don’t have to worry as much about what the next big story will be. You anticipate experiencing a wide range of possibilities, so when something unexpected happens that’s just part of the plan.
David Booth of Dimensional says “Too many people keep falling into the same traps.” Having a planning philosophy helps you avoid many of these traps. Making progress toward your goals is bolstered by avoiding mistakes and traps.
Defined Goals
Your financial philosophy should be tailor-made for you and your particular goals. It should be something that you can lean on whenever you’re tempted with the latest hot investment idea or shiny object.
You don’t need to “be in” on each and every appealing investment. It’s more important that you develop and follow a planning philosophy that you can stick with over good and bad times.
One of my favorite Peloton cycling instructors, Alex Toussaint says, “You have to be persistent to get it; you need to be consistent to keep it.” Alex is primarily talking about fitness, but the very same logic applies to your financial life.
Each year a new big financial story arrives and each one is different from the others. Inflation spikes, COVID, scandals, and wars are among the themes in recent years. Focusing on the big story now likely won’t be useful in managing the hot topic next year and the year after that. Lean into your planning philosophy and let that be your beacon through the fog. 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. Investing involves risk, and while remaining invested can support long-term goals, it does not guarantee a profit or protect against losses. 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.