Simplicity is a Wonderful Thing
Simplicity is a wonderful thing when it comes to understand something, because it is easier to remember and implement effectively. When it comes to your money just remember three words: Save, Invest, and Insure. Those three words create a simple structure for you to implement to do everything important regarding your money and your future plans and goals.
1. SAVE
Saving some money does not mean depriving you of anything. It means you are allocating some money for future use. It will be like giving yourself a reward and a sense of fulfillment . Of course there are many possible reasons to save. You need to know why you are saving money. The “why” provides the incentive and motivation to do it. It is important to write down your “whys” and how much money you will need by a certain time. It isn’t just about traditional retirement or financial independence. It includes anything you want to accomplish in the future such as a car, a house, kids’ education, vacations and trips.
I wrote my first book, “Money: Use It or Lose It” in 1979. My friend, Fred, asked me for a copy. Fred was a good handball buddy and was a coach at a high school in Marin County, California. His wife was a school teacher at the same school. They had more than an ounce of discipline and decided to save her salary and live off of his salary. Today they have met all their financial goals and are more than financially independent. Everyone has to work out their own savings plan but any amount consistently saved over time will create a nice nest egg.
2. INVEST
Investing is not simple. In fact it is one of the most challenging and complex subjects there is. Very few people should try to do this on their own. A word of caution. If you are going to pay someone to help you then make sure they will represent you, and I’m not talking about an institution like a bank or insurance company.
You need to work with someone or some company that is independent and not connected to Wall Street or an insurance company. The best combination of professionals to use would be a CFA(Certified Financial Analyst) and CFP(Certified Financial Planner) who manage on a fee only basis.
In my book I refer to places to look for these professionals.
The subject reminds me of the two times I was on CNBC with Jack Bogle, the founder of Vanguard Funds and the father of index investing. In January 1,1989 Jack and I were sitting next to each other on the set at CNBC. We were taking calls from the public through two hosts.
Brenda Butner one of the hosts put me on the phone with a lady asking me where to invest $60,000 . After advising her that I would need to know a lot more about her situation before advising her but gave her the name of three excellent mutual fund managers.
Then Brenda tossed the question over to Jack. Jack said, “Yes we need to know more about you but you only need one fund, The Vanguard Total Stock Market Fund”. Jack and I represent two different investment philosophies. So goes the discussion between indexing and active management. The lady on the phone would do fine going either way.
To look for more information I refer you to my second book “Getting an Investing Game Plan” published by John Wiley and Sons in March 2003. There are still used copies, and e-book versions available online.
3. INSURE
Insuring is all about financial protection from disaster. Insure your car, your house, your business, jewelry. And your most important asset…yourself. You do this so it will not be counterproductive to saving and investing. This subject is covered in all three of my books,
Most people need help to do all this. You would be well served to use a Certified Financial Planner.
