Hello 2018! There Are No Secrets.

We work with folks that are everywhere in life; from millennials in the first decade of work to baby boomers securing their retirement, to the greatest generation living with dignity and planning their legacy. Working with such a diverse group of clients over the last 25 years has been a significant advantage.  It has provided me a clear understanding of what creates financial success, and in turn, where people fail.

There are no secrets to financial success.  Wealthy people don’t have a secret.  Financial professionals don’t have a secret.  Success comes from within; focusing on what one can control, not on issues and events outside of one’s control.  I’ve been able to develop a basic set of principles to help my clients succeed with their financial goals:

1. Answer the right questions.

Three essential questions to answer are: How much do I need? Where is it coming from? How am I doing?

They are not: How much do I have? What’s going to get the highest return this year? Shouldn’t I be invested in bitcoin?

If you don’t have these critical questions answered right now, start with this.

2. “When” you need your money sets the stage for “where” to invest.

This approach provides short-term staying power through liquidity and long-term staying power through capital appreciation.  It removes timing, speculation, and emotion from financial decisions.  I tell clients to stop worrying about what the market is going to do in the next year and take comfort in the fact that the market value will be higher 10-20 years from now.

3. Diversification is the most effective way to reduce risk in an uncertain world.

The rationale behind diversification is that a variety of investments will yield higher returns and pose a lower risk over the long term than focusing assets in one or a few types of investments.  When one diversifies, they always own investments that are currently in favor and out of favor.  In investment markets, leaders become laggards and laggards become leaders over time, but no email is sent informing everyone of when that is to occur.

4. Don’t let politics – the fear of it or the greed of it – drive your investment decisions.

Sometimes politics are a reason why financial markets move, both up and down, but certainly, they are not always the reason for the magnitude or the direction we think.  If you were one of the folks on the sidelines in 2017 because of fear, you missed out on a year you may not have been able to afford to miss.

As AFG’s Chief Investment Officer, Jack Kraus, CFA, has suggested, “The President is like an NFL Quarterback; they get too much credit when things go well and too much blame when they go bad.”  Indeed, there have been decisions made in 2017 that have provided for market growth, but a mix of factors makes the economy and the market move. This is not a recent phenomenon, and no, this time is not different.

5. Successful planning comes from stacking up good decision upon good decision over a long period, not hitting one moonshot.

Successful financial planning for your family is similar to successful business planning.  Have a clear understanding of what your objectives are; keep a healthy balance sheet (assets and liabilities) and income statement (income and expenses); have a cash policy and an investment policy devoid of subjectivity and emotion; have a plan for the unexpected, and measure progress over time.

Similar to a business, you won’t be perfect in your decisions, and you can’t insulate yourself from downturns and setbacks.  However, if you understand that success comes from good decisions over TIME, not the timing of one great decision, then you have a great chance of ending up like one of my greatest generation clients, who are successful in a multitude of ways.

These five are not the only principles for success, but they are an excellent set to follow at any age.

Author: David Jeter, CFP® | Partner and Financial Advisor | Allegheny Financial Group | January 2018

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The information included herein was obtained from sources which we believe reliable. This report is being provided for informational purposes only. It does not represent any specific investment and is not intended to be an offer of sale of any kind. Past performance is not a guarantee of future results.

Allegheny Financial Group is a Registered Investment Advisor. Securities offered through Allegheny Investments, LTD, a registered Broker/Dealer. Member FINRA/SIPC.