The Saint George Marathon is one of the premier marathons in the nation, and certainly one of the most beautiful. It’s a point to point run through some of the most amazing scenery in the world. For several years I had the privilege of working at the marathon, sometimes spending time with the athletes before the race and sometimes greeting, and often catching them, at the finish line.
This year I waited with my family at the finish line for two of our boys who were running for the first time. I watched as hundreds of runners, having just run 26 miles, plodded past us. I could only imagine what they must be feeling. The look on their faces told the story of perseverance against great opposition, mixed with a glimmer of hope at the end in sight.
Marathon runners are a unique group. Unlike other sports where the athletes tend to have similar builds, long distance runners come in all shapes and sizes. Some of the folks I saw running across that finish line, I would have never expected to see accomplishing such a feat. I have learned over the years that finishing the race is less about size and strength than it is about commitment and perseverance. A marathon runner doesn’t need to have the body of an athlete; they just need the heart of one.
It has been said that investing for retirement is a marathon, not a sprint. It is wrong to think that in order to be financially successful you have to have a six figure paycheck, or a rich uncle, or be born in the right neighborhood. You don’t need to be a top financial athlete, you only need to have a strong commitment, and persevere.
Another thing I love about marathons is how victory is measured. Since it was their first marathon, our two boys measured success by their ability to finish the race. In a marathon with thousands of entrants, only a very small handful are actually trying to come in first. The rest are competing against no one but themselves, and measure success by how they personally finish the race. It is an odd sport where victory even comes to he who finishes last.
I asked one of my sons his secret for completing the race. His simple answer was, “I just kept on running.” And so it is for those who want to retire successfully. You don’t need to be the fastest, you don’t need to be the smartest, and you don’t need to be in the best shape to begin with, you just need to keep running. Keep doing those little things that lead to financial success, and one day you will see the finish line in sight. It won’t matter how anyone else finishes, it just matters how you finish.
I did a lot of cooking as a child. It wasn’t so much that I liked cooking but more that I just liked to not be hungry, and with 10 brothers and sisters around, and being a growing teenage boy, I was always hungry. As a side note, I have raised enough teenage boys myself now to realize that hunger is not dependent on their environment but rather is a constant state of being. Perhaps that is what the teenage Rene’ Descartes meant when he famously said, “I am, therefore I am hungry,” or something like that.
In my efforts to satisfy my constant need for nourishment, I learned to cook. On one occasion I was helping my mom with dinner as she was preparing a rice dish. Wanting to make sure things were progressing I removed the lid from the rice and began stirring it. She quickly corrected me, saying that with some foods, like rice, you are not supposed to touch it once it is on the stove. “Sometimes,” she said, “being a good cook means leaving things alone.”
I was at a training seminar for financial advisors and the speaker was talking about what it means to actively manage an investment account. He talked about doing frequent and appropriate research. He discussed client involvement and reporting. He taught portfolio allocation to maintain risk levels at proper suitability standards. And then he explained that after all the work, one of the most difficult tasks for an advisor would be knowing when to leave things alone. “Active management” he said, “often means the best thing to do is nothing.”
There is a temptation for financial advisors to show they are doing their job by moving things around. There is also a temptation for clients to feel they are getting their money’s worth if they see active buying and selling in their managed accounts. When nothing happens for a while, clients may feel the advisor has stopped managing the account. Much like cooking rice, just because my mom stopped touching it didn’t mean she had left the kitchen.
I have seen clients change advisors only to have the new advisor recommend a full liquidation of all positions and start over. Not only does this risk tax consequences, but often the goals of a client can be met just as well with many of the existing positions. Different is not always better.
My mom taught me that cooking required constant attention, but not always constant action. Sometimes it required patience to allow things to come together. Lessons learned in my childhood kitchen can be applied to the investing markets. Change is not always good. As an investor, do not assume that just because your advisor has made the decision to stay the course, that they are not doing what you paid them to do. In fact, they may actually be doing exactly what you paid them to do. Sometimes the best thing, is to do nothing.
Our daughter Tracie is married and off to finish her final year of school. We visited on the phone this week about her new life, and the many financial surprises that seem to come in those first couple of months. When you are a newlywed, that first trip to the grocery store can be an eye opening experience. Who knew you actually had to buy things like mustard, salt, hand soap and baking soda?
We talked about the importance of creating and living by a budget, establishing good financial habits on which to base their life. Tracie had always saved faithfully while single so she was in a relatively good position for a newlywed, and was hoping to stay that way. We spoke specifically about one of her investments that is currently paying her a monthly dividend check of about $70. She asked about maybe selling some of that $10,000 investment to buy some things for their new apartment. This gave me a chance to visit with her about chickens.
As a young teen living in Mississauga, Canada, on a small 10-acre family farm, I decided one day I wanted to raise chickens. So I got one of those cool mail order farm catalogues and picked out 100 chicks of different varieties and sent off my money. In just a couple of weeks a box arrived in the mail, filled with the little baby chicks and I was in business. Six months later the eggs starting arriving and my new business was actually bringing in some cash.
I don’t remember exactly how it came about but at some point my Dad, likely tired of driving me to the feed store, suggested turning my business from eggs to meat. Before long he was showing me how to properly prepare a chicken for the table. The crazy thing about eating the chickens however, was that the eggs stopped coming.
I told Tracie that her $10,000 investment represented the chickens, and those $70 a month dividend checks were the eggs. For a young couple $70 a month may not seem like much when compared with $10,000, but I assured her that over time those checks would add up. They would buy food, clothing, dinners on the town, movies and a host of other wonderful things. The $10,000 she could spend only once, but the income from that investment could potentially come in her whole life.
“Tracie,” I said, “The monthly checks represent the eggs, the investment represents the chickens. Just make sure you don’t eat the chickens.” I have learned there really are just two types of people in life when it comes to money. Those who recognize the value of eggs, and those who prefer to fire up the oven and eat the chickens. The latter have a great feast today, while the former eat well their entire lives.
As a Boy Scout I loved fishing. One summer my dad took me to the store to buy some new fishing lures. I remember walking the aisle, looking at the hundreds of cool lures. There were jigs, poppers and spinners in all colors and sizes. I was fascinated with the many designs and imagined which one a fish might most likely be attracted to. I settled on one with red stripes and a white plastic tail and asked my dad what he thought of it. My dad did not fish, but he was a brilliant man and I was sure he would know which ones to choose. His simple advice was to remember that most of the lures were never designed to catch fish, but instead were made to catch people. He said a lure manufacturer succeeded if I bought the lure, regardless of whether it worked on fish or not. I have remembered that childhood lesson and have applied it to many other areas of life, particularly ones relating to money and investing.
Today we deal with a different type of fishing, known as “phishing.” This is when a person sends out deceptive emails offering something of perceived value or interest with the goal of getting the unsuspecting victim to open a link or email attachment. If the person takes the bait, the “phisher” can potentially gain access to their personal and financial information. They become helplessly hooked like a fish on a line. Like regular fishing, phishing also involves the use of lures which are designed to attract people. The lures can be very inviting and far too often people are sucked in to taking the bait. Once the lure is bitten, the hooked individual becomes a captive of the internet “phisherman.”
Phishing is used to hack personal computers, to take control of bank and credit card accounts, and to access public databases, so that valuable information and resources can be stolen from the victims. It can be very difficult to distinguish a phishing lure from a legitimate email. Like the lures in the store, they can be very convincing, even to someone alert to the risk. In the current and very public Equifax breach, where the company suggests over 100 million people may have their information at risk, some have speculated the breach may have begun with phishing.
Phishing emails can even appear to come from known sources. If it looks suspicious, don’t open it. It is better to be safe, and miss out on aunt Maye’s great recipe, or dancing cat video, than to be sorry. As with real fishing, as soon as you take the bait, the battle is over and you have lost.
Be careful and never let your guard down. You are like that champion trout, and dozens of anglers who are not interested in your well-being, are continually dangling lures in front of you. If in doubt, be a smart trout and don’t touch it. Aunt Maye’s recipe probably wasn’t that great anyway.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 375 E Riverside Dr, St. George, UT 84790
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