The team at Waypoint believes that people have a natural affinity for the number three. Most of the financial planning we do is in three year increments because that appears to be the time period that is most clearly visible to our clients. You will see that most of our blog posts (including this one) have three tips or ideas (or perspectives) because this number is easier to process. This has been our experience in working with our clients over that past 33 plus years. We also ask many of our clients to identify the three most important things they could teach their children or grandchildren.
So when we get asked for advice, most people naturally ask us what are the three things they should know about any particular topic. As a Summerville investment advisor with two CFP Practitioners on staff, most of the questions we get asked is about investing or financial planning. One particular client asked us this past week, "Do you have three nuggets of wisdom to offer someone looking to invest for the future." We responded be telling him that being a successful investor requires you making prudent decisions with your money. To be a prudent investor, we told him that he needs to always remember these three nuggets of wisdom:
Remain disciplined: this is extremely hard to do when investments become volatile. This is where investment advisors or brokers prey on the emotions of prudent investors. Prudent investors know that there will be times when it is difficult to invest, but they also know that those times will eventually pass.
Think rationally: some of the most rational people make some of the most irrational decisions when it comes to investing. There was a company shut down recently that was promising 1 to 1.5% returns daily when there was no other investment out there getting even close to that in returns. There were millions of investors that got sucked into this ponzi scheme and lost most of their money. Prudent investors think rationally by living by the rule of if it seems too good to be true, then it probably is. One way to help you think rationally is to have an investment policy statement for your investments.
Shy away from forecasts: there is no proof out there that anyone can accurately forecast the economy or investments. However, billions of dollars are spent every year by investors looking for what we call the Tiger Woods of money managers. Our thought process here is that if that one person did exist, then everyone would know about him or her and the actual existence of risk would disappear completely from the markets. The simple fact is that uncertainty in all areas of life creates uncertainty in the financial markets. The best thing you can do is acknowledge this fact and invest accordingly.