Become a Financial Superhero

Become a Financial Superhero
Walter Wisniewski, CFP®

Walter Wisniewski, CFP®

With all the hype about the latest Avengers movie, it got me thinking about how we all can become superheroes in our every day lives. You may already be a superhero to your spouse, to your kids, but how can we become financial superheroes? Fidelity did a study a number of years ago. They looked at all of their accounts and they wanted to find out which accounts performed the best: what were the investments? How often did the account trade? How many “tweaks” did the account holder perform over this given time period? What Fidelity found out was very surprising. The clients whose accounts performed the best were the clients who forgot they had an account at Fidelity. 

A common investing phrase that many educated investors often refer to is “time in the market is more important than timing the market.” In other words, the longer amount of time you are invested, your chances of having a higher investment return greatly improve. Warren Buffet is often cited for sticking with his investment strategy through good times and bad, time and time again. There are a lot of other things we can do to improve our investment experience, getting us one step closer to becoming an actual Financial Superhero:

1. Spend Less Than You Earn: this sounds relatively simple, but creating wealth is about spending less than you earn, forever, and saving (investing) the difference.

2. Get comfortable with being uncomfortable: When we think of our savings rates, it’s nice not to miss what we are setting aside. But if we push the envelope a little bit, and decide to save an extra few dollars from each paycheck, we may begin to notice a change in our cash flow. Pushing your savings rate until it feels a little uncomfortable is a good measure for future financial success. Similarly, when you think of your job, the best advocate for yourself is you. Sometimes you need to have uncomfortable conversations with your boss to discuss your career.

3. Harness Your Human Capital: One of the biggest assets you will ever have is your power to produce an income: your human capital.

4. Understand Delayed Gratification: In our practice, we talk a lot about how our emotions tie into our financial decision-making process. Humans have been found to be scientifically terrible at delayed gratification. We want things now, immediately! We want to improve our lives when we get bonuses and raises, and increasing our savings rate is probably the last thing on our minds. If we can understand this behavioral aspect of ourselves, that we innately are bad savers, we can have a more successful financial future.

5. Utilize a disciplined approach: Have a plan for what will happen during market downturns (such downturns are normal, and expected). Have a plan for market volatility, market upswings, and any other market cycle you can imagine. You want to have an approach that works during good times and bad so when you turn on the news and there appears to be no end to the trade wars with China, you know your money is invested properly.

6. Practice gratitude: we say it a lot, but you can never be happy and ungrateful at the same time. Being grateful for what we have, and not longing for things our neighbors are buying, will help us to think about our money differently. We will always have enough.

Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. Information provided in this blog is for educational purposes only and is not intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with own financial advisors, accountants, or attorneys regarding your individual circumstances as needed. No advice may be rendered by Arcadia unless a client service agreement is in place. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

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