Are You A FOODIE?

On The Money

by Ben Reynoso

This is a powerful lesson, not just for investing but for life, and it comes from the Bible.

Here’s what the Storyteller says, there were two nice people.   Not one good and one evil, but two nice people.   However, one built his house (retirement) on the rock (structured plan) and the other built his house on the sand (emotions).

Meaning, it’s possible for nice people to be casual with their retirement.  It’s possible for nice people to be careless with their investments.

You don’t have to invest with Bernie Madoff to lose money; you just have to be careless at an unfortunate moment.  How many retirements were devastated by overweighting the technology sector in the late 1990s, or being overleveraged in real estate at the wrong time?

Those unfortunate moments are filled with the emotions – fear and greed.  So the key is not to be overly cautious but to be cautious and understand when emotions are leading your decision making.   Don’t build your retirement on the sand.

We are all tempted to deviate from a well structured plan.  It reminds me of the cartoon of a person that has a little devil on one shoulder and a little angel on the other shoulder.  Both are whispering in his ear.

The little devil says, “Go ahead and day trade your money.  You can beat the market, you’ll be okay.”
And the little angel says, “No, no, no.  You have a solid plan in place.  It will serve you well now and into the future.”

Little devil, “Haven’t you heard what they been saying on CNBC? Sell now!”
Little angel, “No, no, no, have discipline.”

How often does this occur for investors?  Everyday!  We must beware of ourselves and the investment “noise” – irrelevant information – that bombards us daily.

Let’s not be careless or casual and build our retirement on the sand. Because even nice people can make careless decisions, casual decisions that accumulate over a period of time and ultimately leads to frustration and the inability to reach your goals.

Build your retirement and investments on the rock.  Formalize a well thought out and prudent game plan that serves you well in good and bad times.  Remember times will change.  This season will not last forever, some seasons are difficult and some are easy, but they never last forever.  Hang in there!