“Money, like emotions, is something you must control to keep your life on the right track.” ― Natasha Munson
Knowing whether you have an investor or trader mindset is a really important aspect of ensuring that you are satisfied with your financial plan and goals. Discover the fundamental principles that underpin effective investment planning. In the latest GWM video, we explore the importance of setting clear financial goals, understanding risk tolerance, and crafting a well-defined investment strategy tailored to your unique circumstances. Financial growth and security can really only happen when you know yourself fully. Take a watch and let us know what you think!
Transcript
Hi, there. Mike Brady with Generosity Wealth Management, a comprehensive, financial services firm here in Boulder, Colorado.
Today I want to talk about investment management and planning. One of the first questions to start with is are you a trader or are you an investor.
Before I really talk about that and how that flows out into our planning, there’s this great book called A Conflict of Visions by Thomas Stowell, who is this famous economist. He’s now in his 90s, and what he said is when you have a disagreement with somebody whether it’s political, religious, it doesn’t really matter, you’ve got to think of it like a tree. You’ve got a tree. You look at my hands and the root of the tree is here and then branches come out. There are all these decisions – a decision matrix. If you’re disagreeing way up here at the top level, the top leaves you’ve got to go back down the tree, down the limbs to where you might have had a conflict division, where you might disagree. We agreed all the way up to here and now we disagree and that disagreement from a philosophical point of view then has repercussions all the way out here like that.
I think of the same process when it comes to investment management and planning. Are you a trader or are you an investor? Very key. An investor is someone who purchases something, purchases an investment, assumes the investment will be greater in the future and knows that there will be ups and downs along the way, but makes very few changes to that along the way.
A trader, on the other hand, is very actively managing saying wow, I want to buy this stock, that stock, this mutual fund. They want to time the market, they believe that now is the time that the market is going down so I want to move over to cash. Very actively managing it. That is a trader and a trader mindset. A lot of the uncomfortable, the displeasure, in the future is when you say that you’re an investor, you’ve set things up like an investor but then you have a trader mindset. That might be your tendency and your bias.
Once you decide whether you’re a trader or you’re an investor, then you have to decide do I take individual business risk or do I not. That means individual stocks. Do you buy a certain company and be very specific to it or do you buy that broad sector, do you buy the broad market? You could by in the automotive sector and be very heavy in that versus an individual automotive stock. Or do you buy the market as a whole, the S&P 500, the international unmanaged stock market index. It’s really a philosophy of in addition to market risk do you take individual business risk.
That is a very key ingredient and once you’ve decided that, then the question is how do you do that? Do you do that through the various ways like mutual funds? Do you do it through separately managed accounts? Do you do it through ETFs, all of which require a very detailed video to describe some of the pros and cons in each. All of them can be not necessarily good or bad. It’s just a preference. What’s better, a sports car or a truck? Well, neither of them. It depends on what the purpose is. It depends on the individual as well. It’s the same way with your particular investments.
One of the most important decisions as well is are you a believer in mathematics, the CAPM, the Capital Asset Pricing Model, meaning that “hey, I can figure out where the value of this and market is or this particular stock and that’s what it’s either overvalued or undervalued”, or are you more of a behavioral finance person believing that the market is filled with human beings who are emotional and sometimes make irrational decisions. That’s a very key decision to ask yourself and to think about. And of course to talk with your financial advisor to say “hey, what do you think? What’s your philosophy on all of these various aspects?” They are important to craft a portfolio that you’re going to be happy with.
The most important thing is that not that every single day, month, quarter or year is happy for you, but that you’re able to survive it. I think of it like a marriage. When you get married you know that there’s going to be some disagreements and not every single day is going to be sunshine and roses. But, of course, there’s more days that are good than are bad and that you know hey, I can weather this and this is for the long-term good and I’m a better person because I’m mashed up with this other individual in this thing we call marriage. It’s no different with investments. You’ve got to stick with what the plan is that you’ve got and that’s where good investment management comes into play.
Warren Buffett says that bear markets transfers money from the impatient to the patient. Whether you’re a trader or an investor, whether or not you believe in individual business risk or individual market risk or how these things come together. The most important thing is to be patient because even if you’re a trader buying and selling and doing all this other stuff there is a streak that’s going to happen at some point that is not in your favor and you’ve got to weather that as well.
I believe in taking individual market risk but not business risk. I believe in a more passive approach being an investor and not a trader. I believe in many other things that help, but I guide that with my clients.
If you want to talk about investment management and planning and the thought process behind it I’m always happy to talk about my philosophy and how it might work for you. If you’re my existing client or if you’re not how it might fit with your individual situation. Mike Brady, Generosity Wealth Management, 303-747-6455. Thanks.
“If you don’t know where you are going, you will probably end up somewhere else.” –Lawrence J. Peter
Goal setting is a fundamental aspect of wealth management, playing a pivotal role in financial success. It serves as a guiding force, providing direction and purpose to individuals and their financial decisions. By setting clear and specific goals, individuals can define their aspirations, identify the steps required to achieve them and maintain focus throughout their wealth-building journey.
Goal setting in wealth management offers key advantages like helping individuals prioritize their financial objectives, ensuring that limited resources are allocated efficiently. Whether it’s saving for retirement, purchasing a home, funding education, or building an investment portfolio, well-defined goals allow for informed decision-making and resource allocation.
Ultimately, goal setting in wealth management is vital for individuals to align their financial choices with their long-term aspirations. By setting goals, individuals can establish a roadmap for success, make informed decisions, stay motivated, and navigate the complexities of managing wealth effectively. Whether aiming for financial independence, legacy planning, or specific lifestyle goals, goal setting serves as a cornerstone in achieving financial well-being and living generously.
Transcript
Mike Brady, Generosity Wealth Management, a comprehensive full service financial services firm here in Boulder, Colorado.
Today I want to talk about the importance of setting goals. You’re going to say Mike, I hear this all the time, quit nagging. You and society is always saying set goals. All I can say is my experience with clients and those that have clearly defined goals, we write them down and we move towards them. We increase that probability of reaching those goals. That’s just it. Over 30 years that which you hear all the time about goals whether it’s a fitness goal or whether or not it’s other goals in your life, it applies to your financial goals as well. So, 80 percent is just a number that I’ve anecdotally through experience have come up with of reaching your goals as clearly defining them and having a plan in order to get there.
I remember a client who was really worried about retirement and I helped her with her goals such as this is how much you’ve got to save every year and we reviewed it every single year. That was how she reached her particular goals is by being very intentional about it versus being well, I hope this all works out or being lucky or accidental that you actually reach the goal. There is being intentional and there is the well I sure hope this all works out. I’m definitely a fan – and you can sleep better at night if you know what the steps are, the small steps there are in order to get to that goal.
Now, if you’re saying to yourself Mike, I’m really bad at goalsetting. I really hate this. Fortunately, I do it all the time. This is bread and butter for what I do on a weekly and a monthly basis as I’m interacting with clients. I say hey, what are we trying to get to whether it’s short-term goals like buy a house. Maybe it’s your first house. Buy a car. Put your kids through school. Retire. Make sure that you’ve got enough funds for any long-term care needs that you might have. Pass on the maximum amount to the next generation. There’s lots of different goals that we can come up with and how do your investments complement the goals that you’ve come up with.
Anyway, setting goals is very important. I do it all the time working with clients. You don’t have to be the expert. Hopefully, I’m the expert that you can rely on.
Mike Brady, Generosity Wealth Management, 303-747-6455. Thanks.
It will never rain roses: when we want to have more roses, we must plant more roses. ― George Eliot
80 percent of reaching your financial goals is clearly defining them and having a plan for how to get there, proactively discussing any speed bumps, big or small. One of the speed bumps that I’ve identified personally, is dying prematurely.
While it may be difficult to think about your own mortality, it is essential. For me, it is not just my personal life that would be impacted, but my clients’ as well. Financial planning is deeply personal, so ensuring that there is someone who can step up in the untimely event of my incapacitation or death is critical.
In this video I chat with fellow financial advisor, Chris Schipske of Columbia, Maryland. Chris would act as my successor in the event of my death, which I hope doesn’t happen for many decades.
Listen for more on the importance of planning ahead.
Transcript
Hi clients and friends. Mike Brady here with Generosity Wealth Management, a comprehensive, financial services firm headquartered right here in Boulder, Colorado.
Today I have a special guest with me, Chris Schipske. The reason for my video today is I practice what I preach. I’m always telling you that it’s my believe that 80 percent of reaching your financial goals is clearly defining them and having a plan for how to get there, and to proactively discuss the speed bumps, life’s speed bumps, that happen whether they’re small or whether they’re big. As I was looking at my life over the last – I’ve actually been thinking about this for many years – I realized that one of the speed bumps is that if I die prematurely. I have to tell you that I’m in excellent shape. I’m very proud of this and I work really hard. I hope to be your financial advisor for at least the next 20 years, if not longer because I absolutely love what I’m doing. It’s been 30 years now, almost 30 years I’ve been meeting with clients and I hope to do this for another 20 years. But, this is where it involves you. If I was to die, I want to make sure that you’re well taken care of and I also want my wife to have someone that she would trust and could go to.
I’ve known Chris Schipske for the last ten years, if not a little bit longer. About a year-and-a-half ago I reached out to Chris and said, “Chris, you and I have been friends and colleagues for many years and I’ve told my wife that I would like her to talk with you if I was to die.” Hopefully that doesn’t happen for many decades. You and I are together at the old folks home and in our 90s. But, god forbid it happened I would want her to come to you. I trust you so much, Chris, that I want to offer you to my clients as well. If I was to die I would want you to, without a lot of disruption, be able to come in here – and I know you would because you’ve been doing this for almost as long as I have, for decades, and you would see how my clients are. Hopefully, in the coming years as you come out to Colorado – I know you have Colorado clients. We have some clients in common, but you’ll get to know some of my clients as well. They know that, once again, if I was to die I have someone that they could rely on. So Chris, would you mind just sharing a few things about yourself because it feels like I’m doing all the talking. So, go right ahead Chris.
Sure, sure. Mike, first of all thank you so much. It’s really nice to be able to get together with you on occasion. I remember the days when we could get together in person and that was a lot nicer and hopefully we’ll get back to that. It seems like COVID-19 is starting to wane a little bit and maybe we’ll be able to get back to some sense of normalcy. You mentioned and you’re right. It’s nice to find someone who thinks like you, maybe gets your jokes a little bit. Over the years we’ve bonded like that and found each other in that business sense that we could trust each other. I really truly appreciate the trust that you put in me. Like you said earlier, my name is Chris Schipske. I’m right out side of Baltimore, Maryland and it’s where I call home. A little town called Columbia, Maryland. I’m married and I have two daughters. I’ve been doing this for over 20 years now so I’m ready to step in if needed, but I hope it’s not needed. I want to stress that. If needed, yes, I’m here ready for you and your clients and your wife.
Like you mentioned, I am a CPA as well as a CFP so I have a very active tax practice as well as an active investment advisory practice here in the Maryland area. We do span across the country and I’ve got some clients over there in Colorado. We’ve talked that I’m going to be making my way out there more and more when hopefully COVID allows that sort of thing. I’m looking forward to it.
Well, thank you Chris. For everyone who’s listening Chris actually has a very successful business there right outside of Baltimore. He’s got a tax practice, a financial planning and wealth management just like I do, with many staff which is great. He and I have slightly different business models. Currently as you know I don’t have a lot of staff. That’s by design. I have a very deep relationship with a small number of clients. What I like about Chris, and this has been my experience and the clients that we have in common is he has a very deep relationship with those clients as well. He really spends the time in order to understand what’s important to the individual client and how to meet those needs. Now he is in Baltimore, but frankly one thing that the last year-and-a-half has shown us is that Zoom works great. He comes out to Colorado quite often and is going to continue that as we continue to work together. Frankly, we increased the number of clients that we’re working with together whether it’s on the financial planning side or whether or not he’s handling the CPA work, the tax and all this advanced and sophisticated estate planning from a tax point of view. I’m doing the financial planning, et cetera, so it’s not a problem.
I want to offer Chris as someone that is trusted for me and I want to let you know that you’ve got to practice what you preach which is I would be a hypocrite if I said you need to be prepared for the loss of your spouse, the loss of your ability to work, all of these really bad things that can happen and that can derail you from reaching your goals if I, too, didn’t take a very serious look and say what could derail my family? What could derail my clients? Which would be me leaving you in the lurch. I don’t want to do that.
So, thank you Chris. Thank you clients and we’ll give a little bit more information on Chris in the link. I’ll also put your website on there and we’ll have you back here as a guest periodically over the coming years.
Sounds good, Michael. Thanks. Absolutely. Thank you Chris and thank you clients. You have a wonderful day. Bye-bye.
“A penny saved is a penny earned”
– Benjamin Franklin
When looking at your portfolio and investments it is up to you to decide when you’d like to be happy- in the short-term or the long-term. In this video we’ll take a look at a chart highlighting time, diversification and the volatility of returns. Spoiler alert: there is no right answer. But if you connect with me directly, I can help you identify what situation you’re most comfortable with and that would provide you with the best returns. Simply email me at mike@generositywealth.com to start the conversation.
Here is my video discussing long-term versus short-term investment and their happiness potential:
Warren Buffett “Never Invest in a Business You Cannot Understand”
Good advice.
I’m going to take it one step further and say “something” or “anything”.
I think Wall Street has created a lot of very creative financial products out there, and some of them are good while others are bad. Mostly it depends on which “tool” you need to meet your individual goals.
That being said, just because something is complicated doesn’t mean it’s better, and you should definitely understand it before investing in it.
That’s one of the jobs of your financial adviser, to help explain each investment you have, how it fits into the big picture, and the pros/cons of each one. Before you invest, be sure your questions are answered fully so you have confidence you’re making the right move!
It’s definitely something I live by, and I never recommend something to a client without full due diligence.
The first quarter was a great reaffirmation that diversification can be your friend. US Large company indexes lagged, but middle and small companies did better. US Bonds did well (in general), as did international stocks.
While diversification does not guarantee a positive return in a generally declining market, my experience is that it does tend to “buffer” some of the returns so you can stay with the plan that works for you.
In my video, I review the past quarter and continue my theme about what I’m watching to come to a “health” conclusion on the markets. Okay, I’m still bullish, but why you may ask? Click on the video for my thoughts and analysis.
