Personal Financial Experiences, LLC: September 2012

Sunday, September 30, 2012

Mr. Obama, it is impossible to redistribute wealth

Benjamin Franklin once said, "Early to bed and early to rise makes a man healthy, wealthy, and wise."

Notice that he didn't say "healthy, rich, and wise." Why do you think that is?

One of the cornerstones of this marathon 2012 campaign has been that Obama wants to redistribute the wealth. The problem is, it can't be done.

Think about yourself for a minute. What defines your wealth? Sure having money is nice because it allows you to enjoy your wealth, but my wealth, and likely yours, is defined by the time and experiences you have with others. Two weeks ago, we went to the Oceana Air Show. It was free. We brought our lunch. It cost me 6 gallons of gas to experience the look on my son's face when he saw the Blue Angels. That is wealth.

Not stuff. Not money. But being empowered to use and pursue your passions and skills.

People that are constrained and dependent on the government are less motivated and less likely to pursue what makes them wealthy.

My iPhone doesn't make me wealthy, it makes me free of a cord and in constant contact with my clients. I don't have a single game downloaded on it.

Taking the money of the rich and redistributing it to those in need, doesn't make them wealthy. It makes them have more stuff. Doug Moran says it much better than I do in his blog entry here.

Benjamin Franklin had it right - pursue wealth, not money. Money won't change that for those in need.

Wednesday, September 19, 2012

401(k) expenses in the news again

Source: NY Times

Tuesday, September 18, 2012

Starting with Why

"JC, you have a degree in Nuclear Engineering. Why are you a Wealth Manager?"

I have probably heard this question a few hundred times.

Chernobyl and Paul Tsongas not winning the Presidency are the cynical answers.

There are other answers like I enjoy the analysis and working with numbers. I like being in control and seeing my results.

None of those answers are tied to people and my passion.

I am a Wealth Enabler because I understand that Money and Experiences are what truly define Wealth.

This weekend I went to the NAS Oceana Airshow. It was free. It didn't cost a thing. Sharing the Blue Angels with my son was a great experience. It was a form of wealth.

We just came back from a week vacation at Myrtle Beach. 4 Nights in a 2 Bedroom Condo on vrbo.com for $800. Perfect weather and got to see my daughter really enjoy the beach for the first time. The $800 allowed my to have that experience. Make no mistake about it - the experience made me feel wealthier than keeping that $800 in my bank account.

Typically, the next question I get is "How do I do it and what do I do differently?"

I focus on three things: Risk, Expense, and Taxes

Risk: How can I reduce your risk to what is necessary for you to experience Wealth? I am more than willing to give up 1% upside to avoid the chance of 25+% downside. Behavioral Finance really kicks in here.

Expense: The lower the expense, the more money is necessarily in your pocket. It's that simple.

Taxes: How can I allow you to keep more of your money by making the moves that improve your tax efficiency. I put a lot of emphasis on this and it really separates me from others.

There is one more collateral benefit: time. Why do you go to Starbucks? Are you buying coffee or are you buying and experience or are you buying time? You are likely buying all three, but you often forget about the time aspect. You are saving time, by not having to make the coffee or clean up the coffee pot, etc.

The same concept translates to the Wealth Management world: Investing is not easy and it takes time. Time that you likely don't have if you have an active family. That lack of time can be costly in the form of complacency or apathy. The experience if you do it yourself can be frustrating - filled with unhealthy emotions like greed, fear, worry, and regret.