Smart Advice for 2011 – More than Money Resource
Smart Advice for 2011 – More than Money Resource
By J. David Lewis
The beginning of a New Year means we have all started another trip around the sun together – nearly 7 billion of us. The end of one year and the beginning of another really does bring changes in people. At least I believe relationships feel different at this time of year. Starting in late November, writers were asking financial advisors for “smart money moves” to include in 2011 New Year stories. They mentioned things like which stocks to buy or tax tricks to use in the coming twelve months. I didn’t respond to any of those. Frankly, my responses probably would not be as exciting as they wanted. We do believe thinking about a few things at this time of year can help your chances of building and enjoying wealth:
- Try to improve your enjoyment and proficiency in your career. From our experience, it is clear that people who really enjoy their work get better at it and have the best chances to build wealth. For some fortunate souls, work is not work. Sometimes it becomes intense. They need a break, but they virtually never regret the things they do to earn their living. If you don’t feel you have this, 2011 will be a good year to find ways you can move closer to it in your profession. If you realize it is not available there, begin looking for ways to get where you need to be. It is never too late. I was in my 30’s when I discovered financial planning and adopted my philosophy of the way I wanted to do it. That was an extreme step that has meant everything to me.
- If you do number 1 well, assuming our society recognized value in whatever that career is, you should be able to earn an appropriate reward for your contributions to the world. And, the lifestyle that income provides will probably feel very good when you consider how much you will have to give up in working where there is less joy and more money. No matter what “smart money moves” you read in publications or hear at parties, earning appropriate income for work you enjoy is the first and largest step in building wealth you can enjoy. Can you improve this in 2011?
- Next, there is a balancing act – to allocate that income among three things. They are things you absolutely need in 2011, amenities to make life more enjoyable and growing net worth. It is not all about accumulation. It is about balance. I don’t remember seeing people who were both happy and totally fixated on building net worth. We are fortunate in helping people see their wealth grow at reasonable rates. They all seem to take great satisfaction in clearly seeing the progress and the activities that affect progress. What can you do to develop a measurement system for seeing how well you balance these elements by December 31, 2011?
- This puts building net worth, or wealth, fourth in our list of “Smart Advice for 2011.” In our society, people really do need to accumulate resources so they can maintain those amenities of life when they no longer enjoy the activities that generate income. In the last while, we have worked for someone who was born and educated in a Communist country. I have an interesting feeling when I think of him telling me he had education, prestige, a better apartment than most and anything else he really needed. He just didn’t have money or choices. I think it is important to keep perspective in an understanding that we accumulate to have choices in our lifetime. In this country, we are not likely to starve. It is the choices accumulated wealth can give us that make increasing net worth important. Income that is not spent on necessities or amenities should increase net worth. It can either reduce debt or contribute to investments. Debts are future income that is spent for necessities and amenities before it is earned. Payments on debt reduce choices in the future. Investments are resources put aside for future spending. Think about your best ways to measure success on both of these fronts in 2011 – while prudently enjoying amenities of life. Balance is important.
- The smartest investment moves you can make in 2011 are essentially the same as they have been every year. First understand that it is impossible to predict exactly what investments will be best in any one year. Pick a variety of very good ones with a personal resolution to hold them until the time you, or your heirs, will spend the money they represent. Understand that this could be a wonderful year for many kinds of investments. It could be very bad for any of them as well. Good investments are not dependent on the year or as solitary instruments. They are elements of a portfolio, where the portfolio results are the measure that is important. It takes five to ten years to know whether an overall portfolio is producing a prudent return.
In 2011, resolve to make the overall portfolio the primary measure of investment results and net worth the primary measure of financial results after you have figured out how to make the source of your income the most enjoyable it can be for you.
Contact J. David Lewis directly with firstname.lastname@example.org or share your thoughts on this topic below. He founded Resource Advisory Services in 1985. National Association of Personal Financial Advisors (NAPFA) was formed only a few years before. Lewis became a NAPFA-Registered Financial Advisor in 1986. He is a passionate advocate for fiduciary, fee-only financial planning and has been associated with financial services since childhood in a banking family. 51077