Common Characteristics That Lead to Uncommon Successes

success1One of the many things that John and I both enjoy doing with our current and prospective clients is putting together financial plans known at HMC Partners as Wealth Visions. Like most planning software systems, it can be as in-depth as you want including retirement, education planning, insurance planning, and asset diversification. Our clients who have gone through this process find the comprehension to be important as it provides a roadmap as they head towards and into retirement. As I was preparing for a recent “Money Matters” radio show (heard every Thursday on 600 WSJS from 9-10 AM), I came across a Motley Fool piece that had been reprinted in USAToday. It was titled, “A financial plan on an index card” which intrigued me as a possible way to condense a very verbose Wealth Vision into an abridged one-pager.

As I read Morgan Housel’s article, I found that it wasn’t a secret sauce for quick and easy financial plans, but more of primer of what separated our clients who had completed the Wealth Vision process as implementers of our recommendations versus those who chose not to.

So here’s the list of what I found to be the commonalities of those who made the changes necessary to have financial indpendence:

1. They worked in careers that they were excited to get out of bed for every morning. They felt they made a difference daily and they planned on working further into retirement…not because they had to but because they wanted. They felt the need to have a place to go to everyday.

2. However, they have saved enough by age 62 to retire comfortably if they physically had to and would be willing to try a totally different career where money was not the driving force.

3. They lived well within their means. They didn’t accumulate “things” rather they accumulated investments one dollar at a time.

4. They didn’t try to “keep up with the Joneses.”

5. Avoiding debt was a key even if they could afford the debt. They have very little “bad debt” i.e. credit card balances, college loans, hefty car or other toy loans.

6. They have mortgages but are dead set on paying it off and live in a house that fits their needs. They are not over-housed.

7. They invest in a diverse portfolio of stocks, mutual funds, and other investments that they plan to be invested in a long time. They may also be willing to take a little more risk in these investments because they look at their horizons as long-term even if they have retired.

8. They continue to invest week after week, month after month, and year after year utilizing dollar cost averaging which allows for purchasing power at different market intervals. They persevere through all market climates and continue to buy.

9. They have enough cash representing their “Emergency Funds” to cover unforeseen needs and keep them from having to make forced sales from their portfolios.

10. They don’t check their accounts daily. In fact, the vast majority only check once a month. This keeps them even-keeled and unemotional regarding market swings.

11. And finally, they accept my concept of “middling.” It’s never as good as it seems nor is it ever as dire as it seems.

How many of these characteristics do you have? Most likely if you have 6 or more, you are well on your way or firmly ensconced in a happy and independent retirement.
• The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. • Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets. • No investment strategy can guarantee success or protection against loss. Investing involves risk, including loss of principal.