Episode 1
Investments Don't Do Good | Series 7.1
What do you want your investments to do for you and are they on track to do it?
- So if my investments are doing good, that means they're on track to having the fuel that I need to get me to the goal that I'm trying to reach. (05:47)
- This is why I say investments are far less important in the grand scheme of things than planning. The planning is what gives you clarity, and the planning is what makes things possible. (06:18)
- So if you don't have the desire or the ability to properly compare and evaluate your different funds, then you need to in my strong opinion either A) hire an advisor who knows how to do this for you, or B) use an allocation fund that has a manager who can make sure you aren't overly concentrated in any one area. (08:18)
Quote for the episode: "Goal statements: I now understand what I want my investments to do, and how I should be evaluating if they are doing that. I want my investments to get me to a goal. So are they on a path to do that? And are they doing so effectively when I compare them to their peers?" (08:45)
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Transcript
Welcome to the Enjoy More 30s Family Finance
Voiceover Audio:podcast. The only podcast dedicated to making life more
Voiceover Audio:enjoyable for young families by hitting on the financial topics
Voiceover Audio:that tend to weigh on us, stress us out, and distract our focus
Voiceover Audio:from simply enjoying life.
Joseph Okaly:Hello, and welcome to the next series here on the
Joseph Okaly:Enjoy More 30s Family Finance podcast. As I said, at the end
Joseph Okaly:of the last season investments aren't my favorite thing to talk
Joseph Okaly:about, surprisingly enough coming from a financial advisor.
Joseph Okaly:But sometimes I think that I may be kind of the only one out
Joseph Okaly:there. So investments are what people have the most questions
Joseph Okaly:about. Investments or what people you don't make movies
Joseph Okaly:about but the mentalities that go with that the 'make it big'
Joseph Okaly:mindset, from what I have seen more often hinders the way
Joseph Okaly:people are able to operate and way they go, then then how it
Joseph Okaly:helps. So why I'm doing this series is because I want to help
Joseph Okaly:you reframe how you view how you utilize your investment. So it
Joseph Okaly:can be done in hopefully, a more constructive way and hence, this
Joseph Okaly:series is called Raising Your Investment Mindset.
Joseph Okaly:As always, if you like what you're hearing, please make sure
Joseph Okaly:to subscribe or follow us on Apple podcasts or really
Joseph Okaly:wherever you listen to. Clicking that star, leaving the review,
Joseph Okaly:it really really does help us reach literally millions of
Joseph Okaly:other young families out there that are just like you. Now if
Joseph Okaly:you want to hear a focus on finances that are related more
Joseph Okaly:to your general mindset, maybe to your parent's mindset, or
Joseph Okaly:even helping your kids with their own money mindset growing
Joseph Okaly:up, please make sure to check out some of our past seasons
Joseph Okaly:that dive deep into those areas. We started this year off even
Joseph Okaly:with a New Year's focus mindset, getting right in the right
Joseph Okaly:direction in the new year. So definitely check those out if
Joseph Okaly:you have not already.
Joseph Okaly:This series, though, like I said is about raising your investment
Joseph Okaly:mindset. How you approach investments as a tool to help
Joseph Okaly:you reach your goals. So just like a podcast entitled Raising
Joseph Okaly:Your Healthy Mindset would focus on a holistic view vs giving you
Joseph Okaly:just you know, five minute crash diet tips. This series isn't
Joseph Okaly:about stock picking or the next best crypto asset. It's about
Joseph Okaly:giving you the opportunity to better understand investments
Joseph Okaly:and their place in your overall plan, the opportunity to not
Joseph Okaly:perhaps be afraid of investments, because they are
Joseph Okaly:some unknown that you were really never taught about in
Joseph Okaly:school. The opportunity really to potentially avoid some of
Joseph Okaly:those pitfalls that we've seen many people out there making.
Joseph Okaly:Today, we are starting off with Investments Don't Do Good. This
Joseph Okaly:is one of my biggest pet peeves. So I will apologize in advance
Joseph Okaly:if you are listening and find me up on the soapbox. So maybe it
Joseph Okaly:is just guys. But I so often hear people say, you know that
Joseph Okaly:dude does really good, alluding to maybe the amount of money
Joseph Okaly:that individual makes or something. But have you ever
Joseph Okaly:just stopped and wondered what the heck that even means? Is
Joseph Okaly:there some scale that I'm not aware of out there where you
Joseph Okaly:pass above a certain threshold in the sky, and now you're in
Joseph Okaly:the 'doing good' camp? The truth is that whoever is likely
Joseph Okaly:whispering this into your ear is saying so because they either A)
Joseph Okaly:see this person buying a lot of stuff and so they're just
Joseph Okaly:assuming they have plenty of money or B) they somehow found
Joseph Okaly:out how much this person happens to earn and to them, that sounds
Joseph Okaly:like a lot. Either way that person is doing their own
Joseph Okaly:internal judgment type comparisons to arrive at that
Joseph Okaly:conclusion.
Joseph Okaly:To take this even a step further, think about if someone
Joseph Okaly:you know is driving across the country. You say to their
Joseph Okaly:parents, "Hey, how is Beth doing on her cross country trip?" If
Joseph Okaly:her parents say "she's doing good", you basically know well,
Joseph Okaly:well, nothing, right? You probably assume she's alive. But
Joseph Okaly:is she doing good because she seen a lot of cool stuff? Is she
Joseph Okaly:making really good time across country? Is she just driving,
Joseph Okaly:you know, really economically from a fuel perspective? How is
Joseph Okaly:she doing good? And when it comes to your investments, I
Joseph Okaly:want you to think about and be able to better determine what
Joseph Okaly:'doing good' means to you, and how to therefore then better
Joseph Okaly:evaluate it. The goal then for today's episode, so the 'if you
Joseph Okaly:can say this at the end of the episode, then you have
Joseph Okaly:succeeded' statement is "I now understand what I want my
Joseph Okaly:investments to do and how I should be evaluating if they're
Joseph Okaly:doing that." So again, "I now understand what I want my
Joseph Okaly:investments to do and how I should be evaluating if they are
Joseph Okaly:doing that." As you could probably tell we often get
Joseph Okaly:people saying that their investments are doing good. This
Joseph Okaly:like other scenarios really means almost nothing other than
Joseph Okaly:the person is currently arbitrarily satisfied with the
Joseph Okaly:performance investments. Again, as we've talked about on many of
Joseph Okaly:these different episodes are the tools that we're using to help
Joseph Okaly:us reach new goals. They are the fuel, but just like launching a
Joseph Okaly:spaceship, the fuel isn't the goal. If the goal isn't to just
Joseph Okaly:have a lot of fuel. The destination, space in this case,
Joseph Okaly:is the goal. So we need to adjust our thinking, first of
Joseph Okaly:doing good from some performance number on a piece of paper that
Joseph Okaly:makes us feel good or bad, because that's really just
Joseph Okaly:saying that we now have more or less fuel than we have before.
Joseph Okaly:But do we have enough fuel? Do we have the right fuel? Doing
Joseph Okaly:good therefore should mean on track to have the fuel we need
Joseph Okaly:to get us to our goal, that destination. So if my
Joseph Okaly:investments are doing good, that means they're on track to having
Joseph Okaly:the fuel that I need to get me to the goal that I'm trying to
Joseph Okaly:reach.
Joseph Okaly:If you earn 15% a year, let's say on your investments, which
Joseph Okaly:is a completely unreasonable expectation long term, by the
Joseph Okaly:way, for anybody out there listening, but you are not going
Joseph Okaly:to be able to meet your goal, then who really cares, right? I
Joseph Okaly:mean, great, I have more fuel for my rocket, but I still can't
Joseph Okaly:make it to outerspace. I'm going to blow up in the atmosphere,
Joseph Okaly:still really not that useful. This is why I say investments
Joseph Okaly:are far less important in the grand scheme of things than
Joseph Okaly:planning. The planning is what gives you clarity, and the
Joseph Okaly:planning is what makes things possible. So Joe, are you saying
Joseph Okaly:I should just ignore my investment performance
Joseph Okaly:altogether? No, I am not saying that. But if you're going to
Joseph Okaly:dive into the performance, you need to do it properly. Properly
Joseph Okaly:means comparing it to its peers. If you told someone about your
Joseph Okaly:investments, it should be number one, they are or are not, excuse
Joseph Okaly:me, they are or are not keeping me on a path to reach my goals.
Joseph Okaly:And two, they are or are not doing well compared to their
Joseph Okaly:peers. Again, they just can't do good on their own compared to
Joseph Okaly:nothing.
Joseph Okaly:Sometimes when someone has an existing investment, they say it
Joseph Okaly:is doing good. And what this oftentimes translates into is
Joseph Okaly:the area their fund is focused in may have done particularly
Joseph Okaly:well. Let's say your account went up 30% in 2021. You would
Joseph Okaly:say, "Hey, this is the best fund ever, I'm never going to sell
Joseph Okaly:it." However, let's say that when we looked at your account,
Joseph Okaly:all you owned was a real estate fund. While the real estate
Joseph Okaly:category index actually went up over 45%, 45%, in 2021. So your
Joseph Okaly:fund in reality did quite poorly. We compared it to its
Joseph Okaly:peers, what other funds like it should have done and your fund
Joseph Okaly:in this example, missed the mark by 15%. And this is true, by the
Joseph Okaly:way regarding the real estate category index this last year.
Joseph Okaly:It is also important to note that the year before that in
Joseph Okaly:2020, it went down over 11%, just to illustrate how it like
Joseph Okaly:most every category should be a piece of a portfolio and not
Joseph Okaly:representing the entire thing.
Joseph Okaly:The point though, is a huge trap we see so many people fall into.
Joseph Okaly:So if you don't have the desire or the ability to properly
Joseph Okaly:compare and evaluate your different funds, then you need
Joseph Okaly:to in my strong opinion either A) hire an advisor who knows how
Joseph Okaly:to do this for you, or B) use an allocation fund that has a
Joseph Okaly:manager who can make sure you aren't overly concentrated in
Joseph Okaly:any one area. So as we get to the end of this episode here,
Joseph Okaly:let's circle back to the goal statement that we said at the
Joseph Okaly:beginning. That statement was "I now understand what I want my
Joseph Okaly:investments to do, and how I should be evaluating if they are
Joseph Okaly:doing that. I want my investments to get me to a goal.
Joseph Okaly:So are they on a path to do that? And are they doing so
Joseph Okaly:effectively when I compare them to their peers?"
Joseph Okaly:So thanks for tuning in today. Join us next week for the
Joseph Okaly:episode called Buy High Sell Low. We're going to talk about
Joseph Okaly:how overall everyone knows buying low and selling high
Joseph Okaly:makes sense, but why so many people wind up doing the exact
Joseph Okaly:opposite.
Joseph Okaly:Overall, if you're able to implement what we covered today,
Joseph Okaly:fantastic as always, less to worry about and more focus on
Joseph Okaly:just going out there and enjoying life. If you're wanting
Joseph Okaly:help with these things, though, if you have questions you need
Joseph Okaly:help in clarifying, you can either head on head on over to
Joseph Okaly:the ASK JOE section on the show's website. EnjoyMore30s,
Joseph Okaly:that's 30s.com. You can also connect with me directly by
Joseph Okaly:visiting my wealth management firm's site New Horizons Wealth
Joseph Okaly:Management at nhwmllc.com. Until next week, thanks for joining me
Joseph Okaly:today and I look forward to connecting with you again soon.
Voiceover Audio:The conversations on this show are
Voiceover Audio:Joe's opinions that are provided for general information purposes
Voiceover Audio:only. They do not constitute accounting, legal, tax, or other
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Voiceover Audio:always seek appropriate advice from a financial advisor,
Voiceover Audio:accountant, lawyer, or other professional before acting upon
Voiceover Audio:any content or information found here first. Joe is affiliated
Voiceover Audio:with New Horizons Wealth Management LLC, a branch office
Voiceover Audio:of TFS Securities, Inc., and TFS Advisory Services an SEC
Voiceover Audio:Registered Investment Advisor, Member FINRA/SIPC.