Retirement Investing…It’s Your Money!

The second Common Sense Core Principle Of Retirement Investing is to constantly remind yourself that “It’s My Money!” When I look at the financial decisions that a lot of retirees make it seems to me that they have forgotten this basic fact!

                                                                   Retirement Investing – It’s Your Money

So many retirees have a lack of confidence in their ability to make sound financial decisions. It’s like they turn off their brains when they sit down to talk with an advisor. They discount what they know and magnify what they think the Wall Street System ‘advisor’ knows. (When I use the term Wall Street System I am referring to the financial media, the financial product companies and their sales force. You can learn more about it in my book, “How Success Investor’s Tripled the Return of the S&P 500” available on Amazon.)

Getting back to my point, you have to realize that you have an incredible amount of knowledge and experience in managing money. And if you are dealing with the typical Wall Street System advisor, you probably have DECADES more experience than them! Give yourself some credit!

Think about it: You are the one that has successfully created the wealth you are trying to invest. The only way you could have done that (unless you won the lottery or got it all as an inheritance) is if you applied solid money management principles. I bet that you worked hard—first in getting an education and then in an occupation. 

You probably did without all the fancy things your neighbors were buying so you could live within your means. I bet that you drove your cars till they practically stopped running. You lived in a house you could afford when you could have bought something bigger. You diligently and consistently set aside money for retirement and for your children’s college education.

All of those traits are what allowed you to get where you are today and those are the same traits that prove that you know more about managing money than the Wall Street System salesperson you’re talking to. You have decades of experience few of them has.

The second part of this Principle is that you have to place a greater importance on the money you’ve set aside for retirement and to remain engaged in how it is invested and monitored.

I know that many of you would much rather be on the golf course or travelling then paying attention to what is going on in the world and the markets. Keep in mind, though, that your money is the goose that laid the golden egg. It is what will produce the income you need for the rest of your life. If that goose is neglected and stops laying eggs you are in SERIOUS trouble.

Some retirees have the tendency to try to offload all of the money management responsibility to someone like a financial advisor. If you have read my book on the Wall Street System then you realize how dangerous that is. There are certain responsibilities and tasks that you can hand off to someone else, but you MUST remain engaged in the management and oversight of that person.

That doesn’t mean that you have to spend several hours a week double checking everything the advisor does. You should pay attention, though, to major economic trends or crises and think about how they might impact your financial situation

It is your responsibility to put in the research necessary to determine if a financial product is in your best interest. I have talked to hundreds of people who didn’t take the time to do that and they have lived to regret it. Many made the biggest financial mistake of their lives because they didn’t invest a few hours of research to verify that what they were being sold worked the way they were told it was. And now they’re stuck. 

I don’t want that to happen to you or your friends, and that’s why I’m sharing this information.

For instance, I remember a widow in Texas that called me one day. She had trusted a ‘financial advisor’ with all of her lifes savings. “He was such a nice man and seemed to know what he was talking about and he really seemed to care about me.”

It turned out that the experienced ‘financial advisor’ she trusted was simply an insurance sales person with little real money management experience or training. It’s possible he had only been an agent for a short time. Yet she willingly handed over her entire life’s savings and put it in a product that she thought did one thing, when in fact it didn’t work anything like what she was told.

She was stuck. She would either have to pay a huge penalty just to get HER MONEY back or would have to endure a decade or more of probable sub-par performance.

ALL because she lacked the confidence in her own abilities; all because she wasn’t willing to put in a couple hours of research to make sure that the product she was being sold worked the way she thought it did.

Annuities are some of the most popular ‘products’ that are being sold to seniors right now. These are very, very complex contracts. In fact, in my experience, 

…Very Few Advisors Understand How They Really Work!!!

The more complex a product is, the more time and work you have to put in before placing your money in it. Remember, this money is your goose that laid the golden egg. That’s a very valuable goose that needs to be closely guarded because there are LEGIONS of nice people that want that goose for themselves.

Be skeptical. Don’t just take their word for it. Do your own research. AND IF YOU CAN’T UNDERSTAND HOW IT REALLY WORKS; if it sounds too-good-to-be-true then DON’T TAKE THE CHANCE OF HANDING OVER YOUR GOLDEN GOOSE 

President Ronald Reagan is credited with ending the Cold War. His actions led to the fall of communism and the Berlin Wall being torn down.

One of his oft quoted phrases occurred during his discussions with Russian President Gorbachev during the nuclear arms treaty negotiations. The phrase was ‘Trust, but verify.’

Today’s investors are in a hostile environment. Let me be frank. There are many out there that have the best of intentions; who are nice, trusting people, who are honest and sincere…that are selling products incorrectly. When that happens, it is the investor the loses.

I’m basing this on THOUSANDS of conversations I’ve had with investors and on emails I’ve seen that these advisors sent the investor.

Trust, but verify.

Always keep these two thoughts in the back of your mind:

1. What if I’m wrong about how this works?
2. What is going to happen to me if this doesn’t work out the way I expect?

There are other actions you need to take if you are using any market-based investments like stocks, bonds or mutual funds (even in a variable annuity). Remember, it’s YOUR money!

You should check your account balances at least every 4 weeks and have pre-determined levels at which you will take action should the value of your nest egg decline.

You should have a clear understanding of the retirement investing strategies and philosophy that is being used to manage your money.

You should understand the fee structure and calculate the total fee percentage (this should be done before entering something like a variable annuity) that you’ll be paying each year. Keep in mind that every dollar that you pay in fees is a dollar you don’t get.

So remember, the second Common Sense Core Principle Of Retirement Investing is “It’s your money!” And your money is the goose that laid the golden egg. Remain engaged. Trust, but verify. Watch it carefully for the first signs of trouble. And take action when necessary to protect it.

The third Common Sense Core Principle Of Retirement Investing will allow you to turn the table on your financial advisor. It will keep you from being at their mercy.

One last thing—if you have a question about any of the information in this series or about your financial situation, you have a special level of access to me because of your subscription. Feel free to email me at jeff@CommonSenseAdvisors.com and I will respond as quickly as possible.

Keep an eye out for the next blog post, and please feel free to comment below and share this with friends.

See you then.