The Beauty Of Simplicity

Today’s Wisdom:

Retirement doesn’t have to be overwhelmingly complicated. There’s beauty in simplicity, and sometimes, we tend to make retirement planning harder than it needs to be.

What You’ll Learn:

[00:42] – A fun fact of the week.

[3:21] – Why some advisors make things harder than they need to be.

  • Some advisors want to make themselves seem smart, and others just aren’t able to communicate clearly. Regardless, your advisor should be able to explain concepts to you in a way that’s easy for you to understand. They should help bring simplicity into your financial life.

[5:03]  – What you can do to add simplicity to your retirement plan.

  • Gather your accounts. It’s easy to think you’re diversified because you have accounts with different financial firms, but you’re not, and all those statements tend to get cluttered together.

[6:42] – What tends to be the most overwhelming?

  • Insurance policies are all sorts of confusing, especially if they’re outdated. They’re exceptionally complicated, and if you don’t understand them, they can get you in trouble. The same can be said for mutual funds. If you don’t understand what’s in those funds, you can end up with a lot of unnecessary overlap.

[9:27] – How to better understand your financial plan.

  • Your financial plan should give you a clear picture of your finances. You should be able to see where your money is and how it’s performing. Getting a clear picture will help to add simplicity to your financial future.

[14:45] – Watch out for half-truths.

  • In the financial world, there are a lot of half-truths. It’s not that brokers and advisors are always trying to lie to you, it’s just that sometimes you miss out on the whole financial picture.

[15:07] – The problem with paper losses.

  • Sure, those losses are only on paper, but they’re still losses, and you still lose money once you withdraw from your account. As you get close to retirement, you can’t afford to suffer market losses. While the market does go up over the long-term, it can hurt you if you don’t have time to wait.

[17:22] – The trouble with fees.

  • There are all sorts of fees in your portfolio, and you might not always realize they exist. You need to track down your fees, and understand what you’re paying for your investments.

[18:49] – Interest rate math.

Your advisor might tell you that because interest rates are low, you should invest your money rather than using it to pay off your mortgage. This logic is sound, but it doesn’t necessarily mean everyone should follow that strategy.

Final Thoughts:

“It’s safer to be a client who admits they don’t understand something that they own versus a client who thinks they understand it and they don’t.”  – Joel Johnson

Additional Resources:

Money Map Retirement Review

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Thank you for listening!