The traditional path to saving and investing has been to focus on the future (retirement), and rely solely on numbers and return on investment (ROI). However, this approach often can be misleading because it doesn’t consider your individual circumstances. “Beating the market” is often an artificial objective because it is not likely to have a substantive impact on your unique situation. Consider this: what does beating the market by one percent less (or more) mean to how you live your life? Do market returns have an impact on how you live your life?
What is relevant is developing a financial plan that considers the following:
- How much do you currently have invested?
- What is your current cash flow?
- What transitions are you currently experiencing, or expect to experience (examples include paying down debt, divorce, concern about illness, job loss, retirement, purchasing a home, providing financial assistance to a family member)?
- Do I feel comfortable with my level of financial obligations (examples include housing expenses, leisure activities, and healthcare expenses)?
By incorporating these factors into your planning, we can begin to understand what needs to change (or not change) in order to live the best life possible without overextending yourself. You may even be pleasantly surprised to learn you can enjoy the fruits of your labors sooner than expected!
Money does not exist for its own sake. Money exists as a utility that we use to improve our lives. How your returns compare to any index, fund, investment category, or another person are less consequential than whether you are meeting your own ROL goals. Measure your success against your objectives, not someone else’s. You don’t need to keep up with the Jones’—or anyone else.
In order to enjoy ROL, you need to understand where all your money is coming from and where all your money is going––and why.
Understanding the “why” enables us to create a plan that works for you and your individual circumstances. You may be living above your means and need to make changes to your lifestyle. Or you may already have enough, and be able to take a trip or enjoy another experience you have been putting off.
Together we can address the following questions:
- What challenges and opportunities are you currently facing?
- What key transitions are looming on the horizon?
Your answers to these questions will determine the inflow and outflow of money, as well as your financial progress or decline. Knowing your age, and how long you expect to live isn’t enough to develop a financial plan that works.
With ROL, you don’t give up the best of life or the best parts of yourself just to get money. The money is there to serve you, not vice versa. Instead of focusing on someone else’s definition of success, write our own. ROL puts quality before quantity by managing your assets in a way that improves your life and provides peace of mind.
In traditional financial planning, the primary components include asset, risk, and debt management, as well as tax, estate, and income planning. All of these areas are essential and necessary for a strong financial plan, but there is more to developing a strong financial plan than numbers.
We all have different values and principles regarding money. Each of us has a history, present circumstances, and future hopes that are unique. By focusing only on numbers, we miss enjoying life now and in the future because we only concentrate on accumulating wealth. A financial plan designed with ROL as its foundation is designed to build freedom, relieve the pressure of ROI-focused planning, and ensure your plan meets your goals.
There is no greater freedom, and no greater wealth, than living the best life you can with the money you have.
Please reach out if you are interested in learning more about ROL or our Strategic Life Planning process. We would love to share more about this innovative and meaningful approach to planning.
The information in this communication should not be considered investment advice to you, nor an offer to buy or sell any securities or financial instruments. The services, or investment strategies mentioned above may not be available to, or suitable, for you. Consult a financial advisor or tax professional before implementing any investment, tax or other strategy mentioned herein. All investments may lose money.