Having the Right Core Values for Saving and Investing is a Must

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In recent newsletters, I’ve talked a lot about the current state of the financial markets and why I believe the stock market is poised for its third major sustained drop since 2000. I’ve talked about the market’s disturbingly thin trading volume, extreme volatility, and glass ceiling, or resistance level, on growth that it has exhibited for over a year in the absence of quantitative easing.

All of that is important to know about and understand – especially for investors within ten years of retirement. Obviously, losing a major portion of your savings to another devastating market crash, like those we saw from 2000 to 2003 and 2007 to 2009, would be a huge setback to almost anyone’s retirement plan. That’s why tracking and analyzing the markets is an essential part of retirement planning, but it’s also only half the equation.

Tracking the markets is part of what I call the “outside game” to financial planning, but there is an equally important “inside game” that often gets overlooked. This inside game involves making sure you have the core values necessary for the job. I believe the reason so many do-it-yourselfers run into trouble with their finances is that they’ve never taken the time to determine whether or not they possess these important values. What’s more, I believe that every financial advisor should possess these values – but that most probably don’t. With that in mind, I’d like to share the core values in this newsletter for those of you who might still manage some of your own finances, or have do-it-yourselfer friends.

I’ll start with a value directly related to tracking the financial markets, which is diligence. Successful saving and investing in today’s complex, ever-changing environment requires putting time in on a daily basis. In my experience, most people can’t make that kind of commitment – at least not long-term. They end up managing their money more like a part-time hobby, which can leave their portfolios exposed to unnecessary risk and significantly limit their odds of achieving their financial goals.

Brutal Honesty

In addition to diligence, there are six other core values that make up the inside game, and I believe a successful investor needs to not only embrace these values, but actively live by them. For example, you may think you possess the value of diligence, and you may even live by it in most areas of your life. But if you aren’t able to apply it, long-term, to managing your finances, then it’s important to be honest about that and to accept it. Pride and stubbornness won’t help protect your money, but honesty will.

That’s why honesty is another of the core values integral to the “inside game.” You could even say that the road to sound, smart retirement planning actually begins with looking inward and determining – with brutal honesty – whether you possess all of the other core values necessary to do the job yourself. And remember, it isn’t enough just to feel that you possess the value: you must also be able to say, honestly, that you have the right temperament, experience, and level of expertise to apply it to managing your money.

If I had to put the core values in order, in terms of their importance, the one I would put at the top is overprotection. I’m sure that this comes as no surprise if you’re a client or regular reader of this newsletter. I have always advocated financial defense as the number one priority for investors who are retired or within ten years of retirement. That’s when it becomes crucial to shift your focus away from portfolio growth (which puts you at risk for portfolio shrinkage) and toward safety and income.

The next core value, which is closely related to diligence, is detail-orientation. Remember, saving and investing is about making a lot of little decisions, and, in order to make the best ones, a good money manager must pay attention to the right details and know how to interpret them. That means paying attention to details related not only to the markets, but to your own financial situation and individual investment strategies. The devil is always in the details when it comes to making good financial decisions.

Coachability and Leadership

Another core value essential to good decision making is coachability. Successful saving and investing requires a person who is willing to change direction when they read something that makes a solid argument. It requires someone who is willing to take “the road less traveled” when they encounter evidence that it’s the right road for them. That’s being coachable.
Closely related to coachability is leadership. A good financial planner is one who can recognize when it’s time to change direction – when they should zig while everyone else is zagging. Once they’ve made that determination, they must also have the courage to take action, and stand by their decision, even in the face of naysayers. That’s the kind of leadership it takes to achieve your financial goals, especially in the “follow-the-crowd” culture touted by Wall Street and much of the financial media.
The final core value I believe you need as part of the “inside game” is fearlessness. By that, I do not mean recklessness. Recklessness would be jumping out of an airplane with a parachute you’re not 100 percent confident in. Fearlessness, on the other hand, is jumping out of a plane with a chute that you’ve made certain is packed properly and fully functional.
By the same token, fearless saving and investing is not crossing your fingers and toes and hoping your portfolio grows and doesn’t shrink in the stock market. Instead, it is applying overprotection, diligence, detail-orientation, coachability, leadership, and honesty to a strategy that allows you to jump into retirement without fear. It is knowing that you have a secure strategy that generates income through interest and dividends – enough to enjoy retirement and achieve all of your financial goals!


David Scranton is the Executive Officer of Sound Income Strategies LLC, a SEC registered investment advisory firm. Scranton Financial Group offers securities through Broker Dealer Financial Services Corp., member FINRA & SIPC. Sound Income Strategies, LLC is not affiliated with Investment Advisors Corp or Broker Dealer Financial Services Corp.
Sound Income Strategies, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor or tax professional about your specific financial situation before implementing any strategy discussed herein.