financial planning

Mike Houge / Flickr.com https://tinyurl.com/ybz97dve

The Law of Diminishing Intent.

Even if you’ve never heard of it, you’ve probably experienced it.

I first ran across this idea when reading a piece by consultant Duncan MacPherson.

As he explains it, “In simple terms, the Law of Diminishing Intent states that, when it comes to finishing a task that seems absolutely crucial one moment, our motivation wanes at about the same rate as the task’s significance. This is largely due to the fact that the emotion associated with the action dwindles, causing the motivation required to finish the project to fade.”

simplyrikkles / Flickr.com https://tinyurl.com/y9v96hdz

You are retired. You live comfortably. Sure, no one would say you are rich, but you have more than you need; and whatever assets you may have left once you are gone, you’d like to leave to your children. Maybe some to the grand kids.

Do folks like you…need a will?

Yes, I believe you do.

First, let me offer a very clear disclaimer. I am a financial planner, not an attorney. So anything I say is simply my understanding of the law and should not be considered legal advice. For legal advice, see an attorney.

Secondly, if you have wills, make sure they are valid.

Paul Townsend / Flickr.com https://tinyurl.com/y958pyo7

Many of the really smart people I knew in high school or college are now doctors. I can’t think of any single profession filled with more exceptionally bright individuals.

And yet, what if I told you doctors do no better with their money that the average Joe?

You be the judge.

Julie Kertesz / Flickr.com https://tinyurl.com/y725bw7f

How many mutual funds do I need to own to be properly diversified?

A lot more than you think.

Sometimes we think about diversification in a very one dimensional sense. Maybe we need to diversify our thinking … about diversification.

First of all diversification is fancy language for not putting all your eggs in one basket. It is the art and science of embracing variety over specificity for the purpose of reducing the risk of significant loss.

DennisM2 / Flickr.com https://tinyurl.com/y84at5k3

I ran across an article some time back with the headline, “When a million isn’t enough: why bankers struggle.” The million wasn’t their savings – it was their annual income. And (fighting back sniffles here), it apparently isn’t enough.

“It’s really not that unusual to find Wall Street bankers who are close to declaring themselves bankrupt,” said Gary Goldstein, co-founder of U.S. search firm Whitney Partners. “Some people are really struggling.” And on and on the story went.

I know, I know…my heart is breaking too…

Mario Mancuso / Flickr.com http://tinyurl.com/mtsrkc5

Sometimes the dumbest thing you can do is not ask a stupid question.

Maybe you have no idea where to start in thinking about retirement planning. And so you think asking about it might be a so-called stupid question.

Well, if that’s you, it isn’t a stupid question – it’s a good one.

So congratulations for just asking! Asking is the first step to gaining wisdom. Acting on what you’ve learned is the second (and most important) step.

wackystuff / Flickr.com https://tinyurl.com/hsyzp3j

The best time to fire someone is before you hire them. And sometimes the best loan for you is the one you don’t take out.

I’ve had people come to me loaded down with poor past decisions, currently reflected in a crummy credit rating. Then, while treading water in a sea of maxed out credit cards, they find it… their dream home! It would be perfect for the kids, perfect for the neighbors, perfect for work and..well…it's perfect!

Guilia Forsythe / Flickr.com http://tinyurl.com/zatmg97

If the purpose of a financial plan is to predict the future for you, I’d say save your money. You’ll do about as well with a monkey throwing darts at some charts.

But if you want to know what the real purpose of a financial plan is, look no further than what happened to the University of Arkansas Razorbacks and the New Orleans Saints football teams a few years ago.

If you aren’t a football fan, here’s a little background on both teams: each had a great season in 2011. And both teams brought most of their key player talent into the 2012 season.

Ken Teegardin / Flickr.com http://tinyurl.com/jvdw3g5

How is anyone supposed to do any financial planning these days?

After all, we don’t know if taxes are doing down, the affordable care act is going away, jobs are coming back or a border fence is going up!

How are we supposed to know what to do next?

Really? Is it really that difficult?

Or are you just stuck because your concept of financial planning is proving to be fatally flawed?

Flickr.com / duncan c / https://creativecommons.org/licenses/by-nc/2.0/

What is your time horizon when it comes to your retirement planning?

Before you answer, check your calendar, your watch…or maybe your birth certificate. I’m guessing your time horizon is a lot longer than you might realize.

If, for example, you said that you have a 20 year time horizon, I’m guessing you mean the time until you plan to retire. So that would make you mid-forties (sorry to give that away).

You feel like you are at the base of your own personal financial Mount Everest and you’ve got a mere 20 years to climb to the top. Fine.

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