I recall the story of a man walking down a country road who hears the awful sound of an animal in pain. As he nears an old shack along the dirt road, he spies an older gent on the front porch, calmly rocking in a creaky old rocking chair. Beside him his hound dog raises his head from time to time, belting out the most dreadful ”yelp” of pain. Why you’d have thought the old man was beating his faithful companion!
The traveler in the story approaches the picket fence, steps up to the gate, and asks “What’s wrong with your dog?”
Without breaking his rocking rhythm nor removing the corncob pipe from his mouth, he responded, “He’s lying on a nail.”
To which the curious traveler asks, “Why doesn’t he get off the nail and stop the pain?”
To which the wise owner retorted, “I guess it doesn’t hurt bad enough to move; just bad enough to yelp about it!”
Is your reaction to your retirement plan something close to that? Are you resting peacefully or ‘yelping’ about the pain? If you’ve had the opportunity to read some of our other articles, you know that many of the questions we field are from people trying to find ways to get rid of the pain of retirement planning and the markets. If you find you might be yelping and not moving off the nail that’s causing you the pain, in this article and the next, we’ll ponder what might help you find some relief.
First Your Plan Then Your Product
Perhaps, like many people we visit with, your experience with financial planning so far has really been nothing more than a sales process designed to sell you a financial product rather than actually helping to put together a financial plan that is unique to you, your goals and circumstances.
Before you begin picking investments and/or alternatives to them, here’s a thought: why not determine whether you NEED a particular product AT ALL? Aren’t your financial life and needs really unique to you? If that’s true, then a sales pitch for a financial product meets the needs of the investment or insurance salesperson more than your needs. You see, financial products of any type are tools to be used to solve a problem within a financial plan. If you don’t have a plan, you don’t know what the problem is and ergo you are simply being sold a product.
When you plan with purpose you will invest with purpose. Instead, most people are persuaded into buying financial products because of their estimated return, or advertised security, or other features. This is one of the biggest mistakes I watch people make with their money. If you’re going to place products in your shopping cart, do so based upon the plan you’ve developed that satisfies Y-O-U-R financial goals and future.