The problem with money is people view it as dollars, as opposed to as a tool. Your money is simply a reflection of what you want your life to look like. 

Most articles talk about investment performance, products, and primarily what's wrong with the industry (of which many points are extremely valid), but they seldom talk about the reason behind why we actually want money.

Our perceptions are shaped by our environment, parents, friends, neighbors, mentors, siblings, and we all have inherent biases (yes, even financial planners).

I try to blend my love of philosophy, humor, and personal finance together to bring a perspective on money that many people haven’t considered in an attempt to reduce the stress that money causes to so many people (what I strongly feel is often unnecessary, regardless of the amount one has). Money can be stressful for so many people and I just don’t think it has to be. In fact, I know it doesn’t have to be. 

I believe financial stress stems from a lack of clarity and the overwhelmingness of many moving parts. 

Everyone views money differently and that’s one of the many things I love most about it. 

I have clients who don’t like the stock market. I have clients who love real estate. I have clients who love being a passive owner in the greatest companies in the world without having to attend meetings. I have clients who don’t want to fix a leaky roof and negotiate with tenants while on vacation. 

Most articles instill FOMO (fear of missing out) and this fear can cause you to take action in an attempt to make you feel as if you’re not properly taking care of your money. However, the best thing is often to do nothing, but this rarely crosses our mind. 

I want to share a quick story that may help shed some light on this.

Between February 12th, 2020 - March 23rd, 2020 the DJIA (Dow Jones Industrial Average), which tracks the 30 largest companies in the United States, lost 37% of its value. You had $1,000,000 and it’s now worth $630,000 five weeks later. How does that make you feel? If you’re anything like most humans, it didn’t feel great. It shouldn’t make you feel great (if it does, I don’t think you’re from earth). 

I spoke with a few people who mentioned in February of 2021 that they had a sense the markets were going to turn and they chose to get out of the market (and didn’t consider the tax consequences of doing so, but that’s the financial planner in me nerding out). Timing the market is a dangerous game for many reasons, but it worked out in their favor here, or so it seemed.

You can imagine these individuals felt really smart right about now. They were watching the stock market plummet as they sat on the couch and thought about what they had just avoided. It almost seemed like these individuals knew something at this time that everyone else didn’t. So, what happened?

After seeing the significant downturn, these individuals felt they had won. They felt like they had beat the system. However, these individuals told me recently they haven’t invested since February of 2021 because they’re “waiting for the right time”. Well, since February 12th of 2020 and as of the writing of this blog (September 2021), the DJIA has increased by ~94%. If you had been invested and didn’t make any changes or try to time the market, your account value nearly doubled. 

The DJIA lost 37% of it’s value in just 5 weeks, has since recovered and then some (financial talk for “a lot”). The reason we invest isn’t because we know when the bad days or good days will come (if anyone tells you they do know, I would be rather skeptical, but also, send me their info because if they do know, that would make my job very easy). The reason we invest is because we work hard for our money and we want our money to work hard for us. 

I’d be lying if I said the downturns weren’t fun, but the alternative is losing out to inflation over time. This is what I like to call “the silent killer”. It doesn’t seem like it's there because you don’t receive any notifications or statements year-after-year saying “Your account value decreased by -3% this year and it’s likely going to be a similar number next year. Have a great weekend!”. 

Who knows if these individuals will ever invest again. It seemed as if in that moment they knew someone that everyone else didn’t, and these are the types of individuals that instill fear in you to take action so you don’t look back and think to yourself “I could have avoided that”. 

Investing isn’t about avoiding the downturns, it’s about understanding that it’s a natural part of investing and although it’s not necessarily fun in the short-term, it is temporary and it’s the price we pay to build incredible wealth over time. 

I mentioned earlier in this blog post, “the best thing may be to do nothing, but this rarely crosses our mind.” Doing nothing, apart from having a well-diversified portfolio and clear strategy with what you want your money to create for you, would have allowed you to amass much more wealth than if you had attempted to take any action. 

Life is going to throw you curveballs. We know this. It’s about having a strategy in place so when these curveballs come, we know how to adjust. 

People often ask me “What should I do with {enter dollar amount}?” to which I reply “What do you care about?” It seems odd at first, but it’s not often we sit down and take the time to think about the way we view money. I often start conversations with new clients by asking “Why do you want money?” 

You’d be amazed by the responses. Some people think they need more to maintain the lifestyle and find out they could cut their time working a job they don’t love in half, still maintain their living expenses, and still be on track to achieve their long-term goals. Others don’t sleep at night from the stress of the market, work as much as they can, save every last dollar, and can’t figure out why they feel they aren’t on track. 

I believe personal finance is about having a strategy in place so you can achieve your goals. It sounds so simple, and that’s because it is. 

What do you care about most and how can you use your money to help you get there?