Ray’s Take. Financial “experts” like to make predictions about what the markets, the economy and sundry other things financial will do in the months ahead. At the beginning of 2013, one well-known economist predicted 2013 would bring 50 percent unemployment alongside a 90 percent drop in the stock market. Thankfully, he was about as far off the mark as you can get. What’s in store for 2014?
Most predictions come closer to reality than those, but basing your investment and portfolio balance decisions on predictions usually isn’t the wisest move.
Someone could claim “stocks will go down,” and he’ll be right at some point. After all, stocks do go down, then they go up again. Another talking head could state, “interest rates will go up.” Since they're pretty close to zero, they will at some point. The real questions are: When, how fast and how far?
Do you really think you can time these changes? There are thousands of really well-trained analysts with massive resources and 100 times the information you have who are striving to do just that. Most of them don’t beat the averages. Do you really think you can do better?
Instead of worrying about predictions, spend your time developing and regularly reviewing a realistic financial plan. Spend less than you earn and don’t mistake luck for smarts when it comes to investment decisions. When it comes to growing wealth over time, there are no magic bullets. Calm and consistency are the keys to success for most of us.
Develop an asset allocation that you can live on and live with to reach your financial goals. Then go watch a sunset. That’s time much better spent than following financial predictions.
Dana’s Take. Now that the first quarter of 2014 is behind us, how are your resolutions going? If saving more and spending less was one of your plans for the year, it’s not too late to get on track.
Consider selecting a significant date that has some relationship with your goals. For example, if you intend to save more for your kid’s college, try starting on her birthday. That way you’ll have a significant annual date to consider how far you’ve come that is also relevant to your goal. Marriage, death, and other annual anniversaries may provide the inspiration you need to help you keep on track with your goals.
After all, we tend to think of Jan. 1 very seldom, but we think of our loved ones frequently. Tying your goals to those most significant in your life will provide a year-round reminder of what you want to achieve.
If you just can’t get the savings ball rolling, consider hiring a professional to get you started. Every dream deserves a plan.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at firstname.lastname@example.org.