The Investment Coach

Ralph Waldo Emerson said, “The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.”

Ask someone what “living well” means and they’d probably say something like “living free of money worries.” Peace of mind is critical to wellbeing and motivation. Worry and stress keep you from being engaged in things important to you, your family, those who depend on you.

Every year, a number of New Year’s resolutions revolve around money— make more, save more, reduce debt. By themselves these are classic “fuzzy goals.” You need specifics, a plan to accomplish your objectives. Take “making more money.” How will you do that? Will you “spend money” to make money, such as upgrading your knowledge and skills through education, training, certification?

Employers complain about a lack of qualified people. Google “Gallup StrengthsFinder” and research Clifton StrengthsFinder 2.0.

You were born with God-given talents and if you are not operating in sync with your inherent strengths, you become bored and disengaged. If you are in the wrong role, your earnings and health will suffer.

Are you making the most of your gifts, passions, and values?

The Gallup/Clifton StrengthsFinder is used by more and more companies to increase employee engagement and retention. Colleges and universities are using the assessment and coaching to guide students into the courses and majors suitable to their talents, gifts, and passions. Do what you are naturally good at, do what you feel passionate and care deeply about, and money will come.

For students and recent graduates, heads up. Too often well-meaning people, including bosses and supervisors, will push you into their thinking about what best fits you. That’s why students change majors, change schools, change jobs. If you are in the wrong role, pushed there by others, you will not succeed. Understanding your true talents, and adding skill and knowledge to operate in strength, is key to financial and purpose-driven success.

After you finish school, you have an estimated working life of 40 to 45 years, over which time you aim to achieve financial independence. If you waste five or ten years floundering around in the wrong pursuits, it’s just that...a waste.

If you’re going to save more, extra income you can invest for the future is a plus. Save for what? Be specific. Whatever it is, a new or first home, car, college for kids, retirement, boat, trip...identify specific costs today, specify a time frame to actualization, add inflation and hypothetical rate of return, and set the money aside in an earmarked account. Financial planners have processes to help you do that.

For debt reduction you need specific targets and time frames. Get rid of higher cost debt first. Have a long range plan to retire debt free, including a paid for home. Build a Freedom Fund early in the game. Enough money in a safe money market account to sustain you and your family for a minimum of one year with no income. That creates freedom and peace of mind. Stuff happens. Money begets choices and flexibility.

Your Freedom Fund should be your first savings goal.

Cover your bases. Insurance is a cost but stuff happens! Adequate base liability and added umbrella liability coverage is critical. Health insurance, disability insurance, life insurance are important components of planning. Risks exist whether you have insurance or not. “Self-insurance” is a risky proposition. Even the wealthy maintain prudent insurance portfolios.

Be “tax wise.” Take full advantage of tax-advantaged savings vehicles, including various types of retirement plans, plus employer matches where available. College savings plans offer tax free accumulation and other benefits. Dividends on stocks are taxed at a lower rate than ordinary income. Long term capital gains are taxed at rates lower than ordinary income. Certain investments such as real estate or municipal bonds offer tax advantages. Insurance strategies may offer tax advantages.

If you’re an aspiring entrepreneur or are one, a closely-held business owner or partner, the business is likely to be your largest investment. How will you ultimately harvest the value from the business or practice to fund the future you desire, your ultimate retirement? Understand the difference between a “lifestyle business” and an enterprise, and the precepts of Value Acceleration.

Fuzzy goals will not get you where you want to be. Specifics count!

Lewis Walker, CFP®, is a financial life planning strategist at Capital Insight Group; 770-441-3553. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which otherwise is unaffiliated with Capital Insight Group. He is a Gallup Certified Clifton Strengths Coach and a Certified Exit Planning Advisor (CEPA®).

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