How Ongoing Planning May Keep Successful Investors Invested

Today, it’s easy for current events to sidetrack an investor’s desire to build wealth.  Debt ceiling limits (recently resolved), foreign conflicts, and rising interest rates are just a few examples attempting to grab investors’ attention.  What does it take to stay invested with so much uncertainty taking place?

The key is thinking beyond today.  An investor must have faith in their long-term picture.  Regardless of how unclear it may look now; successful investors never lose faith.  When you lose clarity or don’t believe things will work out or are convinced it’s different this time (it’s not) then faith evaporates.  With faith gone, all you really have is a shrinking account and an increasing about of fear and doubt.  This often leads to mistakes, many of which are hard to recover from.

It’s completely natural to have questions and concerns regarding current events.  With so much hype and consistent noise coming from all media channels, it’s hard not to be impacted by the elevated volume.  What’s the best solution given each investor has their own priorities and timeline?

Planning, the act of ongoing planning (not a financial plan) is what keeps successful investors invested.  Dwight Eisenhower famously said, “plans are worthless, planning is everything”.  It’s the ability to update your thinking, adjust your timeline, and reflect on your priorities annually that best describes planning.

How are cashflows?  Are cash reserves sufficient for near-term needs?  How will I pay for an upcoming big-ticket expense?  Does my current investment selection support an increasing retirement income?  Is enough being invested today?  What actions now allow for more choices later?

All answers are discoverable in planning.  Gaining the necessary clarity on your long-term picture is made possible through the act of planning.  This ongoing dialogue flushes out doubt and instills confidence in financial and life decisions.  The point of planning is not to gather all the correct answers, but to explore possibilities and think about various scenarios around what you want.

One tenet of planning is assigning a specific purpose to each account you own.  It may seem easier to lump all your cash into a single savings account, less is more, right?  Sometimes, but not when it comes to holding the right cash reserves.  Co-mingling these dollars with summer vacation cash and the August college tuition payment creates friction.  Mentally accounting for multiple jobs from one account leads to errors and is stressful on the brain.

This same approach applies to various investment accounts.  Some may be necessary for near term income in seven to ten years.  Other accounts may be assigned the purpose to address retirement income or paying for long term care should it be necessary.  Every account needs a job description all of which is made possible by planning.

Scheduling planning on a reoccurring basis reduces the anxiousness and worry that naturally comes from making financial decisions.  It puts the emphasis on what investors can control, their spending, investing, and savings.  It recognizes that outputs such as rates of return and liquidity events are very often outside of what can be controlled.  Planning shines the light where it needs to be, focusing on investor behavior.

As time passes, investors may reflect on their process of planning.  The results of setting time aside to think strategically compound just as your investments do.  Planning offers more clarity around what you want, though it does require time.  What mattered before may not carry the same weight and importance with new information as the years pass.  The only way to gain this knowledge is by following a repeatable process.  Having systems and a framework in place provides reassurance regardless of what’s happening now.

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