The Truth Business

My daughter’s priest says, “faith is caught, not taught.” I think there is plenty of truth there as we have to be willing to hear, and be open to change. Our work here doesn’t involve religious faith, per se, but it is centered around faith just the same. To be a successful investor, you need to have faith in the future.

What Anchors You?

With non-stop breaking news, sometimes it is difficult to maintain faith that everything will work out. Faith anchors one end of the belief spectrum with fear at the opposite end. I don’t mean blind faith or optimism but faith because that is what squares with actual market history. If you have doubts, just take a look at the value of the S&P 500 Index in the year of your birth and then look at the actual returns for the S&P 500 from then until now. I was born in 1955 and the S&P Index started that year priced at 313 (after a big increase in the preceding year). Today it is about 2050 and the annual return from 1955 until now have averaged 9.7% per year (against a 3.7% average rate of inflation).

Earlier, I mention fear as the opposite of faith. Actually, many investors fear the wrong thing. Some fear market volatility and temporarily “losing” money when the real fear should be actually outliving your money. Running out of money should create a lot more fear than normal market volatility, however, often this is not the case.

 Patience and Discipline

As the oldest firm of our type in South Carolina, we have the benefit of having worked with a large number of investors over the years with widely varying circumstances. While the “numbers” change, the financial planning/investing truths do not. Our main job is to communicate these truths in a way so that they take hold and grow…so that they are “caught.”

Because our work involves finite resources and infinite possibilities, there is always an element of tension. This can cause some clients to attempt to control outcomes. Our view, lovingly conveyed from 32 years of experience, is that outcomes cannot be precisely controlled. Outcomes can’t be engineered.

What can be controlled is how much you save, how much you spend and how patient and disciplined you are. In this context, patience means avoiding missteps while discipline is doing the right thing…in good times and in bad. While we may not be in the “soul saving” business, we are in the “lifestyle saving” business. Ready for a real conversation?

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