Thoughts On Money [TOM]

This week's blogpost - https://bahnsen.co/3T5kkjI

I have a simple truth to present to you today – if it seems too good to be true, it’s probably too good to be true. 

Please join me as we navigate the importance of investor maturity and how some financial products aren’t always as they seem. 

I will take you in a time machine back to the start of my career, provide you with some shocking comparisons, and much more. 

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Today's Post - https://bahnsen.co/3J91t3Q

Today I want to discuss a very simple and actionable planning item – the interest rate you are earning on your cash.

As we know, inflation and interest rates are spiking, yet still, the national average yield for savings accounts is less than 0.25%.

Please join me as we dive right in and address what a saver is to do in these interesting times we are living in.

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Last week I celebrated my birthday, and this week I got to enjoy one of my birthday gifts – Warriors tickets (NBA basketball). My in-laws sweetened this gift by also volunteering to watch our kids, so my wife and I could go together.

The drive from home to the arena is modest in miles and daunting in drive time – LA traffic. I laugh in hindsight, but I was fumbling to find directions, as I kept asking Siri to pull up directions based on the old name of the arena. I’d ask to be navigated to “Staples Center” and Siri kept trying to direct me to the local Staples office supply store. I had forgotten that the name was changed at the end of 2021 to the “Crypto.com” arena (no comment).

Eventually, I remembered the name change, was able to map out directions to our destination, and we enjoyed an evening of basketball – even though the Warriors lost 🙂

This is a very simple lesson, right? You need to know the name of your destination before you can map out directions. As you may have assumed, I have a personal finance parallel here, but let’s start with some background…

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First, a false alarm (fire drill) interrupted a client conversation at the office.  

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Today, I’d like to address a financial misconception that’s running rampant right now in the world of personal finance.

Financial anxiety and economic uncertainty are spiking, and investors are speculating if we are in a recession, approaching a recession, or potentially avoiding a recession.

This climate, and the overall general sentiment, have left many investors wanting to avoid risk assets like the plague. The beauty queen of the last 6 months or so has been the two-year treasury. I can’t tell you how many times I’ve heard investors tout that they’re selling risk assets and buying a two-year treasury or how they’re holding off on deploying new money into the stock market and buying a “two-year” until things “settle.”

Now, if you don’t mind, I’d like to explain why I think the two-year treasury is fool’s gold. But, first, I need to provide some background on how I personally view the financial planning process.

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Today I would like to address a very simple question: where do you go for advice

A very straightforward inquiry but an important one nonetheless.  As it often is in personal finance, sometimes the simplest questions can be the most revealing and thought-provoking.

To help illustrate what I’m referring to here, I’d like to start with a personal story that I’m sure some of you can relate to.

In the last week or so, I’ve fielded numerous calls that have all revolved around the same or similar questions.  An investor has some surplus savings they’ve earmarked to spend in the near future, and they are wondering where to park these funds.  I’ve found myself repeatedly cautioning people away from placing short-term monies into long-term investments.  This a good reminder for all of us regarding the importance of respecting time horizons. 

Please join me while I unpack this crucial financial planning truth.

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Each and every one of us needs A.A. (Awareness and Accountability). The path to successful investing relies on (1) educating ourselves to become aware of what good investor behavior looks like and (2) resourcing the right advice-giver to help hold us accountable to making good decisions.

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As we wrap up 2022, what better time than now to reflect on our blessings and begin to meditate on our own financial objectives for the coming year. For some, prioritization will be key and candid conversations with their financial advisor on these matters will be important. For others, a reminder is needed that with wealth comes responsibility and an added level of complexity as we layer on the piece regarding legacy planning.

For the Cummings household, we are feeling absolutely blessed by our growing family, and we are excited to celebrate Christmas with an added stocking on the mantel. I hope you and your family have a wonderful Christmas and take time to dwell on all the blessings that have been bestowed on you.

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Today, I would like to answer the question that has no right answer.

Sounds like a fun little exercise, right?

I want you to take a moment and ponder this query:

What is the single most important word in personal finance? 

One’s answer to this question could evolve and morph over time.  Depending on your season of life or recent experiences, perhaps your answer changes.  For others, maybe the answer to this question is the same as yesterday, today, and tomorrow.

Personal finance is… personal.  So, you’d expect a wide array of answers when addressing a question like this.

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