Let's celebrate the good times, but be prepared for the bad times (July 2023)

The return of inflation, higher interest rates, and the looming threat of a recession has prompted many to reconsider their financial decisions.  But what is their basis for making a change (or continuing on the same path)?  Most people just react to the world around them or try to predict what is going to happen next and base their decisions on that guess.  This is why having a financial philosophy matters.  But that is not enough.  This philosophy has to account for the fact that we will have both good times and bad.  It has to be 'timeless', if you will.  Most folks, including many professional advisors, employ a philosophy that only considers the good times.  They focus mainly on the 'offense' portion of the financial model.  You may have heard the phrase: 'Defense Wins Championships'.  The same is true in managing your finances over a lifetime.  This is why we focus on the ‘defense’ portion of your Financial Model as much as your ‘offense’.  They need to be in balance in order for you to reach your true financial potential.  Life throws curveballs when we least expect them and usually more than one at a time.  This shouldn’t surprise any of us, but for some reason it does.  The stock market or real estate market dropped 30%?  Interest rates went up?  Down?  Inflation’s back?  Someone lost their job?  Their company stock lost 80% of its value?  Someone died early, became disabled, got sick, sued, etc.?  None of these are pleasant to think about, but they happen.  It’s a part of life.  And we are doing lifetime planning.  Not college planning or retirement planning or insurance planning or estate planning, etc.  Lifetime planning, which encapsulates all these things.  So we have to plan for them.  We have to build contingencies and redundancies into our clients’ financial models to deal with them when they happen.  We can’t prevent personal/human disasters from occurring, but we can prevent them from being financial disasters as well. 

Through both good times and bad, I have had the tremendous honor of acting as my clients’ financial co-pilot for almost 30 years.  And we’ve confirmed through this experience together that having a financial philosophy that accounts for both truly matters.  

I hope you have a wonderful time this weekend with your family and friends celebrating the birth of this great nation!  And maybe put a fire extinguisher next to the grill, just in case. 

 Best Regards,