Consistency is the Key To A Sound Financial Plan (Flower Mound, TX)

Worried about the current market volatility? A sound financial plan can help mitigate the risk allowing you to sleep better and retire on time!

As this market bounces around, I want to first share with you some of my thoughts and then I would like you to read a short article by Gregory Luken, a financial writer as well as an in-the trenches financial advisor like me. Among other things, Gregory is the author of Retire with Confidence: Your Financial Tool Box. I have reproduced it with the author’s permission.

First, my point of view:  No one, not Warren Buffet, the Chairman of the Fed, or your next door neighbor knows what will happen in the market an hour from now, much less this week or this month. However, we do know, we live in the greatest country in the world. While this or that country may claim they have more of something or other, just consider: If New York City were a country, based on its gross domestic product, it would be the 15th largest country in the world! That puts it ahead of South Korea, the Netherlands, and just about everyone else. The entire economy of China is only about 2 ½ times the economy of New York City.*

With this in mind, please read: Consistency Counts.

"There are 21 stages, or races, that comprise the Tour de France each July. The top place finishers in each stage are awarded points. Riders don’t have to win every stage, or even most of them, to come out on top. An American won a record-breaking seven consecutive Tours from 1999 through 2005. And yet, out of the 147 stages in those seven Tours, Lance Armstrong won only 15% of them. Winning only 15% of the races propelled Mr. Armstrong to the best record in history.

It’s like that with investing as well. You don’t need to win every week, every month, quarter, or even every year to end up on the podium of your goals. In fact, trying to keep up with each day’s winner can be counter-productive to long-term success. One of the marks of a successful athlete is the ability to run their own race, regardless of what’s happening with those around them.

And just like the preparation for the Tour is different than preparation for the Super Bowl which is different than gearing up for the Ironman Triathlon, your preparation—your finish line—and your reasons, are different from everyone else’s.

It’s easy to get distracted. With a strong stock market, the current US economic recovery still faces the same skepticism experienced after virtually every good showing. The pessimists remain convinced that the economy is in trouble. There is plenty to worry about: the trade deficit, budget deficit, housing bubble, low savings rate, weak incomes, rising interest rates, over-indebted consumers, a loss of U.S. competitiveness, a weak dollar, huge increase in energy prices and the continuing struggle to get Britney Spears to behave."    

2008 is a great year to be in the race and make sure you don’t sacrifice the day at the expense of the entire race. And the smart way to do that is to stick with a good plan. Of course any time you want to review your plan, please call me. We can meet by phone or in person.