What I’ve Learned So Far

By Candace Bahr, CEA, CDFA

As I approach my 27th year as a financial adviser, I find that I’ve learned a lot. Here are some of the things that experience has taught me.

Saving a little can mean a lot. If you save $5 a day for your entire working life, you can retire a millionaire. Just as in the race between the tortoise and the hare, when it comes to saving and investing, endurance rules.

Bear markets, like unwanted relatives, show up whether you want them to or not. The average length of a bear market is 18 months.  But the bear market seems twice as long when you are in the middle of it. Don’t panic! Holding quality investments for the long term is what creates profits.

Emotions cost money – discipline makes money. A tumble in the market causes panic for the emotional investor, who sells near the market bottom. Wary, she bides her time, and doesn’t get back in until near the top of the next market cycle. You know what happens next…

Buying is easy, selling is hard. Anyone can buy an investment, but most investors don’t have a clue when to sell. If the investment goes up, they want to hang onto it, rather than selling and reaping the profits. And if it goes down, they want to hold on until it goes back up, rather than selling and limiting possible future losses.

Investing isn’t about perfection, it’s about making money. You don’t have to be perfect when investing. Even Warren Buffet, who is a self-made billionaire many times over, says he’s right only part of the time.

There’s no magic to sound money management. The foundation for success consists of a budget, a savings goal, an emergency fund, and insurance to protect the people you love.

Fear of risk can be costly. It is natural to fear risk – fear is part of our instinct for survival.  Many people are so afraid of making investment mistakes that they ignore the real risk of inflation gobbling up their savings. Don’t be afraid to go out on a limb, when necessary – that’s where the fruit is.

It’s more than money – it’s your life. Setting financial goals is the key to keeping your finances healthy. But as critical as it is to be well-heeled financially, it is just as important to know what gives your life meaning. This concept is so vital, I used it as the title of the book I co-authored with Ginita Wall.

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