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The Results Are In: Female Investors Are Beating Men

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Guys, here’s one thing you may want to rely on your wife for – investing advice. That’s right, the evidence has been mounting, and the conclusions are clear – women are better investors than men.

Surprised? You’re not alone. Even most women themselves believe they are far less superior than men when it comes to investing. There are plenty of studies to show that. But when you examine the actual performance results, women’s portfolios regularly outperform men’s.

Recently, one firm wanted to bring this knowledge to the forefront. State Street Global Advisors put up a statue of a girl facing off with the Wall Street bull. The media dubbed her as “the fearless girl.” It got a lot of attention, this girl making such a bold statement on a street where it’s considered a man’s world.

Executives from the company commented to multiple news outlets that they strategically placed the statue there on International Women’s Day, to kickstart the conversation of women and investing. In particular, the fact that women are indeed better investors than men.

Boys Will Be Boys – A Good Thing When Investing?

Terrance Odean and Brad Barber, professors at Berkley’s Haas School of Business, are some of the most prominent researchers on the gender gap in investing. Based on their research in the 90s, they found that men traded 45% more than women. This research led to their paper Boys Will Be Boys, which has been published in dozens of scholarly journals.

Actively trying to time the market commonly leads to lower returns. Odean and Barber site this as the biggest cause of the widening gender performance gap. Men’s active trading during their research period caused them to have average returns that were a full percentage point lower than women.

In comparison, they found that women tend to be better at behaving in ways that lead to long-term investing success. This means adhering to some of the golden rules of investing, such as staying in the market, weathering market fluctuations without making drastic changes, not taking unnecessary risk, and sticking to the strategy that best aligns with their goals.

Essentially, women tend to be “buy and hold” investors, heeding the advice of experts like Buffett and Bogle. They’re much better at investing than they give themselves credit for.

The Results Are In

According to research from Fidelity, women outperformed men by 0.4% in 2016. That may not seem like much, but it can add up over time. Especially given the fact that the study found women have outperformed men for the last decade. Women also saved 9% of their paychecks, compared to an average of 8.6% saved by men.

That’s how women can end up with a lot more money than men overtime.

Betterment PhD research scientist, Sam Swift, also built a similar case. In a recent study, Swift went back through 60,000 investment accounts from January 1, 2012 through January 6, 2016, and examined the account holder’s activity. Here are three key findings from the study:

1. Women logged into their account 45% less frequently than men. Less logins mean a decreased chance of seeing your portfolio when it’s down, which can lead you to make a bad decision.

2. Women take less risk than men. They had a tendency to stick with their recommended allocation model, while men deviated from the advice, usually taking more risk than suggested.

3. Women tend to be much better at staying disciplined during market fluctuations. They changed their allocation 20% less frequently.

Yet, despite the volumes that this evidence speaks, another study from Fidelity found that 8 in 10 women hold back from talking about their finances and investing, simply because they lack the confidence to do so. The majority also don’t think they’re smart enough to talk to a professional advisor on their own, and believe that they are grossly underprepared for retirement.

How can this be what women truly think, when they’re in fact the investing alpha? Welcome to the conundrum of conundrums in finance.

The Psychology Behind It All

On the surface, this evidence simply highlights the difference in performance between male and female investors. But when you dig deeper, it gives you a unique look into the psychological make-up of men and women.

Odean and Barber’s research led to an important finding – men tend to be inherently overconfident, and it shows up in their investing behavior.

This is what they believed led to men’s active trading, and in turn received most of the blame for their poor performance. Overconfidence bias has been most commonly linked to the bad behaviors of marketing timing and stock picking, which can wreak havoc on your portfolio, no matter your gender.

Conversely, the female psyche causes women to be inherently risk-averse and goal-oriented.  They are focused on the long-term rather than the short-term, and don’t feel the need to trade in and out.

This lead to better performance for women. However, women’s lack of investing confidence causes many of them to not invest, remain ultra-conservative, and avoid seeking professional help. That’s when their nature becomes destructive.

Perhaps that’s the reason the conundrum still exists – women behave in a way that leads to solid investment performance, but they think in a way that fosters little to no confidence in their abilities.

Why Does It Matter to You?

The point of the studies cited here, and this article, aren’t to dub one gender as the savvier investor. It’s also not to claim that gender is a direct driver of investment success. Rather, it’s to better understand the role psychology plays in investing, and where the strengths of each gender lie.

Each gender could learn something valuable from the other. Case in point, women need to become more confident when it comes to investing and their finances. Not because of gender equality, but because it’s vital common sense given the reality we face today. According to Pew research, 40% of women already out-earn their spouses. Furthermore, nine in 10 women will be the sole financial decision maker in their household at some point in their life.

Men could benefit by humbling themselves to the market and reducing active trading. In addition to Odean and Barber’s findings, DALBAR’s 2016 annual report on investor behavior proves that bad investor behavior is the leading cause of under-performance, and contributes to poor performance over the long-term.

In essence, both men and women would benefit by understanding that a lack of confidence, as well as overconfidence, can hurt your performance.

You get one shot at this financial journey – one. Failure is not an option. So, you need to manage your money in a way where there is a very small possibility of failure. Above all, that means taking a seat at the table. It also means staying disciplined according to your investment policy statement, and implementing an investment strategy that aims to limit downside exposure and mitigate volatility, while still capturing potential. Now, that’s a philosophy that can work no matter what gender you are.

9 Things Successful People do Before 8:00 AM

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Successful people are a rare breed. They’re willing to do what others are not, and they know the importance of practicing good habits daily. In fact, they’re almost obsessive about it. While you may think they’re crazy, they know adhering to these simple daily disciplines is what makes their day super productive. For most successful people, one of their most important daily disciplines is their morning routine.

The morning is one of the most important times of your day. I don’t know about you, but I’m much sharper at 7:30 in the morning than I am at 3:30 in the afternoon. That’s my time before swimming through a flooded email inbox, putting out fires, meeting with dozens of clients, and running a company.

That’s why it’s so important to make the most of your morning. You need to craft a routine that sets you up for successful day – that gets you motivated, energized, and feeling like you’ve accomplished something before you even step foot in the office. Otherwise, how is your attitude going to be for the rest of the day?

Supercharge Your Morning Routine: 9 Things Successful People do Before 8:00 AM

I took the time to perfect my morning routine. I learned what other successful people did with their mornings, and modified them to fit my lifestyle. This is the one daily discipline I try to stick to as much as possible. Although sometimes, “life” does get in the way. But I’ve realized that on the mornings I follow it, my day is much more productive.

To help you find inspiration for crafting your ultimate morning routine, I want to share mine with you. Here are nine things that successful people do before 8:00 am:

1. Get up. A common denominator among successful people is that they’re early risers. Forming this habit can be hard at first, but if you stick with it, it will become second nature. Waking up early ensures that you’ll maximize your morning routine, because you’ll have more time to do it. You’ll have more “you” time, which after all, is the whole point of your morning routine. However, it’s important not to sacrifice your sleep simply to wake up early. Make sure you get at least 7 hours of sleep at night. Not only is it important for your health, but it makes getting up early easier to do.

2. Learn something new. It’s easy to forget about this important ingredient in the formula for success. Luckily, the morning is the perfect setting in which to work on your personal development. Mornings can bring peace and quiet, before the kids wake up and the noise from the daily grind starts. Take advantage of your morning by using it to read 15 pages of a good book, catch up on your favorite blog, or read the latest article written by one of your mentors. (LIFE HACK – If you exercise on a stationary machine like a bike, treadmill, or elliptical, reading is a great way to make the time go faster.)

3. Exercise. If you’re like me, when I come home, I’m in family mode. The kids have activities to get to and homework to do, and I want to spend time with my wife. The last thing I want to do – let alone have time to do – is exercise. That’s why the morning is one of the most ideal times to get your work-out checked off your list. Not only that, but exercise is proven to boost your mental functioning, energy and improve your mood. A morning workout can mean more energy and clarity during the day. Plus, your health is important – make it a priority, even if you can only spare 20 minutes.

4. Prioritize your tasks/goals for the day. Think about what you have on the agenda for the day. What are your important “must dos?” One of the first things I do in the morning is write down my priority actions for the day. I know that even if I only get those things done, I still had a productive day. This helps you walk into your day with a game plan, and prevents you from getting lost in things that can detract from your productivity.

5. Write down one thing you’re grateful for. Keeping a positive outlook on life, being successful, it all starts with gratitude. It’s easy to get caught up in the negative – to only see the problems, or what could be when you look at your life. It’s important to consciously stop and remind yourself of all the good things you have in your life. Keep a gratitude journal, and every morning, write down one thing that you’re grateful for. It doesn’t need to be complicated. Then at the end of the year, you’ll have identified 365 things that you’re grateful for. Sounds like the foundation for a happy life to me.

6. Don’t look at your phone. One of the biggest mistakes you can make in the morning is waking up and immediately looking at your phone. Checking emails, looking at social media, are things that can throw off your morning routine. Remember, this is your “you” time – it’s okay to shut the rest of the world out for a few hours. But if you’re one of those people who just can’t resist the glow of your screen, try to modify when you check it. Set yourself a time limit, and say that you’re not going to check your phone until 7:30.

7. Eat breakfast. Breakfast is the most important meal of the day – in case you haven’t heard that before. I’ll be the first to admit I always struggle with this one. But, making sure that you eat breakfast is almost like working out. It can boost mental functioning, energy and focus throughout the day. It’s also proven that people who eat breakfast eat less during the day, and tend to weigh less than people who don’t. Even if it’s a quick protein shake or breakfast smoothie, try and squeeze it in.

8. Cross one thing off your personal to-do list. Sometimes, finding the right work life balance can be difficult. This is another instance where your morning can be useful. Take this time to try and cross one thing off your personal to-do list – whether it’s to get that week-old laundry put away, spend time with your spouse, take out the trash, or empty the dishwasher. Knowing that you can go home at the end of the day without a million things to do around the house can be great for productivity.

9. Finally, get to work. Now, it’s 8:00. It’s time to work – to step out into the world, answer emails, take phone calls, and grind.

Why Does it Matter to You?

Sticking to a morning routine means you’ll be practicing habits that foster good health, higher productivity, and the ability to handle situations thrown your way during the day.

By no means is the routine I’ve laid out here the end all be all solution. These are simply common denominators I’ve found in the morning routines of other successful people I admire. I then built a routine I could apply to my life.

Your morning routine will be unique to you. Maybe nighttime is the best part of the day for you to exercise. Maybe you like to start working at 7:30. Maybe you read on your lunch break. Whatever your simple disciplines may look like, the point is to make a morning routine that fits with your lifestyle, and that you can stick to. That ensures you’re practicing good habits from the moment you wake up, and that your day will be as productive as possible. It may take a few attempts to find what will work best for you, but once you find your groove, the positive impact it can have on your entire day is incredible.

15 Common Sense Money Principles That Will Change Your Life

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The game of reaching your full financial potential is 70% behavior. Successful people practice good habits, every day, for their entire life. They’re willing to do what others are not. Successful people also live intentionally with their money – meaning they use their money to live life on their terms and conditions.

That’s really what the secret “formula” boils down to. How you behave, and the choices that you make every day. Those choices are what determine your success.

You see, how to find financial success isn’t some huge secret or algorithm that takes expert-level knowledge to crack. If you were to ask a wealthy person how they got there, you would probably be shocked at how simple their answers are. You’d probably leave the conversation thinking, “Heck, even I can do that.”

And you absolutely can. That’s because much of what successful people do when it comes to money is simply abide by common sense principles – many of which I’m about to share with you here.

Here are 15 common sense money principles that will change your life:

1. Spend less than you make. The is probably the most important common sense principle you can apply to your financial life. If you are constantly overspending and maxing out your lifestyle, you’ll never reach your full financial potential.

2. If you can’t pay for it in cash, you can’t afford it. This mantra is the best way to avoid drowning yourself in credit card debt. Waiting to make large purchases until you have the money will always pay off more than spending money you don’t have.

3.Forget about the Jones’s. Living up to society’s definition of “rich” can be costly. Wealthy people know what their definition of financial success is – and that’s the only one that matters. They would gladly defy societal standards, rather than living a deceptively poor lifestyle just to keep up appearances in the eyes of their peers.

4. Protect yourself. Stuff happens. And when it does, your financial foundation can quickly crumble if the proper defenses aren’t in place. You should seek to protect every aspect of your life’s work – from material assets like your home to your most important asset, you.

5. Pay your credit bills in full every month. If you want the second fool-proof way to avoid going into credit card debt, don’t charge more on them than you can afford to pay off every month.

6. Money doesn’t buy happiness. Having money doesn’t mean anything. It’s how you use your money that creates your emotional response. There’s plenty of research to prove you derive the highest degree of happiness when you spend your money on experiences, not things.

7. Slow and steady wins the race. No one becomes financially successful overnight. It’s a long road of practicing good habits and staying disciplined. If you keep searching for the instant button, or speculating and gambling with your money, you’ll never reach your full financial potential.

8. Get comfortable with being uncomfortable. Investing is one of the most unnatural things you’ll do in your life. But you have to be okay with that – you have to be okay with the fact that markets rise and fall. Staying disciplined according to your Investment Policy Statement is the best way to find investing success.

9. Time is your most valuable resource. Stop thinking that you have time to catch up. Not only does your money need time to grow, but it needs time to bounce back from drawdowns. The longer your money is invested, the better your chances of financial success. Investing early and investing smart are crucial.

10. Out of sight, out of mind. If you’re like me, it’s easy to find a home for the money you see sitting in your checking account. One of the best ways to curb unnecessary spending and boost savings is to set up automatic deposits from every paycheck to go straight to your savings or investments.

11. Costs matter – a lot. Costs from taxes, expense ratios, and advisor fees add up. They directly impact your bottom line. Over the long-term, they can eat a large portion of your wealth. Be sure you know how much your investments are costing you, practice tax management, and work with an advisor who is transparent on the fees you pay directly to them.

12. Money is like a kid. It’s incapable of managing itself – think of how your kids would’ve turned out had you let them make their own decisions, without any guidance or discipline from you. Money is the same way. You have to apply structure and discipline to how its managed, and you have to tend to it on a regular basis.

13. Your most important values must align with your financial actions. If your financial actions aren’t furthering your most important values, you’re probably not going to accomplish the goals you set for yourself. Values should play the same role in your financial life as they play in your daily life – they should guide your financial actions and priorities.

14. Be debt free. Or at least bad-debt (i.e. credit card, other high interest debt) free. Carrying substantial amounts of high-interest debt directly affects your ability to save and invest for your future. It makes everything else in your financial life have to work that much harder to pick up the slack.

15. Live the life you want. Wealthy people know their “why” behind money – you need to know yours too. Why do you work, why do you invest, why do you do any of it? Your answers will be specific to you, but it ultimately comes down to being able to live the life you want. That’s the real goal – to have your money work for you, so that you can reach your full financial potential. But you have to start with “why.” Otherwise, you don’t have anything to fight for. You can’t live intentionally with your money, because there’s nothing guiding your behavior.

Warning: Checking Your Portfolio Often is a Good Way to Lose Money

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8 billion. That’s the number of times per day Americans collectively check their phones. Probably because smart phones have become the hub of our lives in a certain way – virtually anything you need, there’s an app for that. Including your investment performance. But frequently checking your portfolio is a good way to lose money – and it’s getting harder not to look.

Stop Checking Your Portfolio

We pride ourselves on making technology available to you that puts your entire financial life in front of you, in real-time. That makes checking your investment performance as simple as pressing a few buttons. And we intend to keep advancing that technology, to make managing your financial life as easy and convenient as possible.

With that in mind, call me crazy for what I’m about to say – You should stop looking at your investments.

There are plenty of reasons for why you should stop constantly checking your portfolio. At the top of the list is your mental and financial health. While you may think checking your portfolio often is a good habit, in reality this leads to increased stress, impulsive, emotionally-charged behavior, and poor investment performance.

The market is a volatile animal – it’s a toss-up every day whether it will be up or down. And here’s a secret – the market is in a drawdown often.

It can even fluctuate hundreds of points one way, and back the opposite way before the closing bell rings. The average daily swing for over 40 years has been +\- 1.4%. So, the more often you check your portfolio, the greater your chances of seeing it when the market is down.

And when you see negative numbers staring at you, your emotions will stop you in your tracks every time. Thanks to a little thing called myopic loss aversion.

What Behavioral Finance Tells Us

Myopic loss aversion was first introduced by Daniel Kahneman and Amos Tversky in 1984. This sliver of behavioral finance states that people dislike losing money more than they like making it. In other words, we feel the pain of a loss much more deeply than the happiness of earning.

Investors who check their portfolios often will perceive investing to be riskier than investors who don’t. According to Betterment’s data on login frequency, checking your portfolio quarterly instead of daily can reduce the chance of you seeing a moderate loss (of -2% or more) from 25% to 12%.

In a 1997 study by Kahnerman and Tversky, the idea that loss aversion reduces investor returns was confirmed once again by their research. Take this statement straight from their abstract:

“The investors who got the most frequent feedback (and thus the most information) took the least risk and earned the least money.”

In other words, the more time you spend checking and analyzing your portfolio, the more likely you are to let your emotions take control.

The Beer Goggles of Investing

Think of loss aversion as the beer goggles of investing – you’ll be more likely to see a loss the more often you check your portfolio. This can then make you think your investments are riskier than they really are. If you listen to your emotions, you can end up making some bad decisions – changing your risk tolerance, selling or liquidating funds, and so on.

And very rarely do these decisions end up helping you. Research proves that investor behavior is the leading cause of under-performance, and contributes to poor performance over the long-term.

DALBAR’s annual study of investor behavior shows that in 2015:

1. The average equity mutual fund investor underperformed the S&P 500 by a margin of 3.66%. While the broader market made incremental gains of 1.38%, the average equity investor suffered a more-than-incremental loss of -2.28%.

2. The average fixed income mutual fund investor underperformed the Barclays Aggregate Bond Index by a margin of 3.66%. The broader bond market realized a slight return of 0.55% while the average fixed income fund investor lost -3.11%.

3. In 9 out of 12 months, investors guessed right about the market direction the following month. However, the average mutual fund investor was still not able to keep pace with the market, based on the actual volume and timing of fund flows.

You also need to remember that your portfolio is made up of several different asset classes, according to your risk tolerance. Even when the market is “up,” one or more of the asset classes in your portfolio may be down. If you happen to be checking your portfolio at this time, these losses will bother you more than the fact that the market is up will excite you.

Decisions incited by loss aversion don’t align with your most important goals that are outlined in your Investment Policy Statement. And remember, if a decision doesn’t meet these criteria, then you shouldn’t act on it. Period.

Why Does it Matter to You?

It’s your right to be able to check your portfolio essentially on-demand. Part of your job as an investor is making sure that you’re satisfied with your results.

Our job is to help you overcome bad investor behavior, and make smarter financial decisions. To reach your full financial potential, you need to implement strategies that account for the human side of investing, and in turn, help make for a smoother ride. That’s why we created strategies designed to mitigate the impact volatility can have on your bottom line – something that traditional strategies often ignore.

Investing is uncomfortable – it’s one of the most unnatural things you will probably do in your life. You’re putting your wealth on the line, when putting your wealth on the line is something you wouldn’t inherently do. But you have to get comfortable with being uncomfortable. You have to realize that investing is a game won by checking and stressing less. Rather than struggling to fight the market and potentially causing your financial health to suffer from harmful side-effects, take a break from checking your portfolio until your advisor says it’s time for a review.

10 Critical Things to do With Your Money in Your 20s

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If you’d told me four years ago I’d be working as a marketing director for a wealth management firm, I would’ve laughed. In my dreams, I was in a big advertising agency in New York, LA, or Chicago. But, life has a funny way of working out – for the better, I believe. Not only do I truly love my job, but it gave me an advantage most people my age don’t have – knowing the critical things to do with your money in your 20s.

A Generation Lost?

As an almost-27-year-old, I can confidently say I’m learning the right way to build the foundation for a successful financial future. But unfortunately, many in our generation aren’t. And while we’ve been dubbed the generation who thinks they “know it all,” there’s a lot we don’t know. Especially when it comes to money.

And it’s not because we aren’t smart. It’s because there’s a lot of bad advice out there. Thanks, in large part, to a media over-saturated with talking financial heads, and an internet where you can drown yourself in financial information overload. Perhaps that why a lot of people our age struggle to find their footing when it comes to money. We don’t know where to find the right answers, let alone what the right answers even are, so financial matters fall to the bottom of the priority list. Or we put them off altogether, because we’re under the misleading impression that there’s always plenty of time to catch up.

Pile on top of that skyrocketing student debt, crippling credit card debt, absorbing all the other costs associated with “adulting,” the early stages of your financial life going from simple to complex, and you have the perfect financial storm. A storm that can cause you to easily fall into the traps, and start your financial journey on the completely wrong foot.

10 Critical Things to do With Your Money in Your 20s

When you hit your mid-20s, you start asking, “What do I do?” Do I save money, or pay off debt? When should I start investing? What kind of account should I invest in? How much money should I be saving? If I don’t start saving now, I can always catch up later, right? How do I organize and prioritize my goals? Heck, someone just tell me the first step to even take!

I did, and luckily, the right answers were just a short walk down the hall. And I want to share some of those answers with you, in the hopes they’ll help you on your way to building a solid financial foundation.

Here are 10 critical things to do with your money in your 20s:

1. Save your money. I can’t stress this enough – save your money people! Pay yourself first, every month, and you’ll be much further ahead than most. If you fail to save your money, everything else in your financial life has to work that much harder to pick up the slack. An ideal savings rate to aim for is 10% – 15%. And that’s not an outrageous number that can’t be reached – I know, because I’ve done it. I’ve saved as low as 10% to upwards of 19% of my income annually over the last few years.

2. Limit your credit card spending. There’s a good rule of thumb I’ve been told by the adivsors in our office – if you can’t pay for it in cash, you probably can’t afford it. We live in a right now society. But, waiting to buy something until you have the cash to afford it will always pay off more than impulsively spending money you don’t have. And if you do have credit cards, pay them off in full every month. I’ve limited myself to one credit card, and mentally set a monthly limit for myself that I don’t exceed. Anal? Maybe. But I have no credit card debt.

3. Don’t lock up your money. One of the biggest mistakes I see people our age make is dumping all their money into their 401k. You’re locking that money up, at a time in your life when you’re going to need as much liquid money as possible. When I first wanted to start investing, my advisor I work with in our company wouldn’t let me. That’s because you have to build up your liquid savings first. Then you should start investing. And in my case, I’m not investing in a qualified account – instead, my money is in a non-qualified account similar to the allocation of a 401k or IRA. So, if I need it, I can get it. 401ks aren’t bad – in fact, they’re an important tool for retirement. But you need to make sure you fill your buckets in the right order. Otherwise, you can get into trouble down the road and be tempted to take out loans on your 401k.

4. Protect yourself. This is probably the last thing on anyone’s mind when you’re in your 20s. It was definitely the last thing on my mind. But, this is the most ideal time in your life to protect yourself. Chances are, you’re never going to be as healthy as you are right now. And you never know what’s going to happen if you wait. For example, I put it off, and then was diagnosed with ulcerative colitis in 2014. As a result, I got a lower rating on my life insurance policy, which means increased premiums. But the point is I’ve protected myself, and when I have a family one day, they’ll be taken care of should something happen to me. You can easily lock in your insurability when you’re young with an inexpensive term life insurance policy.

5. Fill up your short-term bucket. In the world of finance, your money is generally divided between three buckets – short-term, intermediate, and long-term. Your short-term bucket is your cold hard, liquid cash that sits in your savings account at the bank. Fill up this bucket first, before any other bucket. You should always have 3-6 months of liquid cash reserves to get you through the hiccups when life happens – like when I had to pay $600 to put all new tires on my car this past spring. Or had to spend $1,500 on new furniture when I moved. And the great thing is since I have savings, I can pay for things like this without using my credit card.

6. Eliminate bad debt. Bad debt is high interest, short-term debt – like credit card debt. If you have it, make paying it off a top priority. Carrying debt directly affects your ability to save and invest. And paying out interest rates of 15% and higher is crazy! Think if the money you invested made 15% – we’d all be a lot happier. You also shouldn’t be investing when you have high amounts of short-term debt. Chances are, the interest you’re making isn’t more than the interest you’re paying out. Note – if your short-term bucket is full, you shouldn’t have to rack up credit card debt.

7. Prioritize your financial goals. Nothing with money happens overnight. You have to understand it’s a journey, and it always will be. Write down your top financial goals at this moment in time. Then determine which bucket they belong in – short-term, intermediate, or long-term. Once you do this, then you can start formulating an action plan to achieve that goal, and start deploying your money appropriately. It’s helpful to talk through your goals with someone who’s already achieved them, like your parents.

8. Start investing. The earlier you can start investing, the better. The longer you wait, the less time your money has to grow. But remember, do it the right way. Eliminate short-term debt, build up your liquid savings, and then start exploring the idea of investing. You may want to think twice about putting your money in a qualified account right now. Keeping it in a non-qualified account gives you access to that near-liquid money, should you need it. Then, you can always put it into a qualified account down the road once you’re more settled. You should also consider talking to a professional investment advisor before you invest. Not just going out there and trying to figure it out for yourself. Robo-platforms have made investing easy and convenient as well.

9. Sign-up for a software that helps you manage your financial life. I’m talking about a one-stop software that shows you every piece of your financial puzzle. Not a robo-investing platform that only focuses on one area of your financial life. Finances are complex, it can be hard to understand what you have and how it all works together. That’s why aggregating everything into an organized, easy to understand format is crucial in helping you make smarter decisions. We offer JB Wealth Builder to our clients, which shows them their current financial position in real-time. Another example of a software like this would be Hello Wallet.

10. Consider hiring a financial advisor. I would’ve never known the right way to build my financial foundation if I didn’t work at Jarred Bunch. Sure, I could’ve asked my parents for help, but even they would be limited in the advice they could give. To navigate the complex world of finance and investing, and to ensure you build a solid foundation, you’ll probably need the help of a professional advisor. Talk to your parents and friends about who they work with – you want to make sure this is someone you trust. Also, make sure they are truly an advisor, not a broker. You can learn more about the difference here.

Why Does it Matter to You?

Your 20s are an important time in your financial life. It’s the stage that sparks your financial growth, and sets the pace for the rest of your life. Getting it wrong now can have detrimental effects down the road. The tips discussed here are a good way to help you start your journey in the right direction.

The 5 Most Revealing Questions to Ask Before Hiring a Financial Advisor

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Hiring a financial advisor can be stressful. You’re trusting someone to help you accomplish one of – if not THE – most important things in your life. That’s why you need the leg up. And the best way to do that is to know what matters, what doesn’t, and the critical questions to ask a financial advisor before hiring them.

Seeing Through the Smoke and Mirrors

The institutions and Wall Street broker-dealers have spent the last century building their grandeur. And they want to hold onto that power, forever. As consumers have gotten smarter, the traditional industry has had to do a lot to cloud your vision from what’s really going on.

For example, a lot of people don’t even know what their investments are truly costing them. And costs matter – a lot. They directly impact your bottom line. When investing, you can incur fees and other costs at almost every turn, from the advisor fee, to the institution’s fee, to the cost of the funds in your portfolio (your expense ratio), taxes, and more. And unless you explicitly go digging, most of these costs will remain hidden from you.

They also try to saturate your brain with a lot of fancy terminology to describe those of us qualified to offer financial advice – broker, CFP, CFA, CMT, advisor, investment manager, financial planner, portfolio manager, and so on. Which combination of the alphabet do you choose? While you should do some basic investing research before hiring a financial advisor, I say ignore the words and letters. Instead, find out what this person actually does and how they conduct business. That’s what matters more.

The next few paragraphs will give you the most important bit of information you should consider when hiring a financial advisor – and that’s knowing the difference between an advisor and a broker.

Advisor vs. Broker: Who Has Your Best Interest at Heart?

It’s critical that you understand what I’m about to say – Most people 1) don’t realize that most advisors aren’t fiduciaries, and 2) don’t realize that they’re not actually working with an “advisor.”

Before the 90s, there used to be a known distinction between advisors and brokers. In fact, there’s still a hard distinction between the two – it’s just not known to most people. It was in the 90s when the traditional industry stopped calling their salespeople brokers, and started calling them advisors. Ever since then, they’ve done a good job keeping the catch-all “advisor” category alive and well.

The biggest distinction is that advisors are fiduciaries. This means they represent you, and are legally obligated to work in your best interest. No one else’s. They typically charge a flat fee of assets you have under their management, and that is how they’re compensated. Basically, they have zero to no conflicts of interest, because their loyalty lies specifically with you.

On the other hand, brokers are not fiduciaries. They work for an investment firm (commonly known as a broker-dealer), and are representatives of that broker-dealer. Not you, the client. Brokers are obligated to sell the products offered by that broker-dealer. When it comes to products, a broker’s standard is “suitability.” This means if an investment is suitable, but not necessarily the best or conflict-free, they can still sell it to you. They’re paid on commissions from the broker-dealer they represent, not by you. The need to sell among brokers is high.

The 5 Most Revealing Questions to Ask a Financial Advisor Before Hiring Them

There are numerous questions, theories, and strategies for picking an investment advisor. But I believe it really comes down to asking a few core questions that get to the root of what matters most – what this person stands for.

Here are what I believe to be the five most revealing questions to ask before hiring a financial advisor. Take these questions with you when you conduct your interviews:

1. Are you an independent advisor or a broker? Your first question should get to the root of whose best interests they represent – yours, or an institution’s. I started Jarred Bunch because I was passionate about making a difference in people’s lives – so much so, that I walked away from a cushy, six-figure job in corporate America to strike out on my own. I remember being so excited about building a company that was going to change the industry. On the day my business cards arrived, I looked on the back and saw in writing, “Scott Jarred is a Registered Representative of so-and-so big Wall Street broker-dealer.” This was the opposite of who I am, the opposite of what Jarred Bunch stands for. I couldn’t make money work for people – I was still working for and being controlled by the man. So, we broke free from the chains, and became an independent Registered Investment Advisory firm (RIA).

2. Who pays you? If they’re truly an advisor, their answer should be something like, “You pay me.” They should clearly lay out how they charge their fees, and disclose all costs associated with doing business. Down the road, if you decide to work with them, you should also ask for complete transparency on portfolio costs. Brokers, on the other hand, are paid commissions by the broker-dealer they represent. In addition to the conflicts of interest this can create, it can also cause them to jack up your advisor fees – they have to make money after the broker-dealer takes their cut off the top.

3. Are you legally obligated to act in my best interest? The answer to this must be yes. All the time, no exceptions. If they’re a true advisor, their answer will be yes. This is their duty as a fiduciary – they are legally bound to act in and offer solutions that represent your best interests. Brokers are legally bound by contracts with their broker-dealer, and must act in the best interests of that broker-dealer. Yet another red flag that they’re not a true fiduciary.

4. What is your firm’s history and current professional standing? In other words, you can ask to see a copy of their Form ADV. This is a registration document that advisors must submit to the SEC and to state securities authorities. Form ADV is divided into two parts. The first part discloses specific information about the Registered Investment Advisory firm that is important to regulators. This includes things like name, number of employees, nature of the business and so on. The second part acts as a disclosure document, and includes information on fees, any conflicts of interest that may be present, any disciplinary actions, if they act as a broker-dealer and more.

5. What do you think you can help me accomplish in the next three years that would make my life significantly better? During the interview, take the opportunity to outline your top priorities, and give the high-level overview of what reaching your full financial potential looks like to you. Note that you should be doing most of the talking when you get to this point. The advisor’s job should be to listen, and hear what value you’re looking for them to add to your life. Then ask them what specific steps they can take to help you get there – so that when you guys meet three years from now, you’ll feel like the time you’ve invested in this relationship has been worthwhile. Not only does it give you a glimpse into how well the advisor aligns with your values, but also gives you a clue as to whether they view the world with an abundance or scarcity mindset.

Why Does It Matter to You?

Two of the most important people in your life are your doctor and your financial advisor. Cliché, I know, but something that I believe.

In fact, think about hiring a financial advisor in terms of what made you pick your doctor. Would you have chosen them if they told you their loyalty lied with anyone but you, the patient? If they said that they have to represent the best interests of an outside group, not you? If they only offered you one treatment option, regardless of whether it was the best thing for you, because that’s what the group who controls them allows?

Heck no. So, why then, would you consider hiring a financial advisor, one of the most important people in your life, who conducts business this way?

That’s why it’s so important that above all, you ensure you’re working with a true advisor – not a broker using the traditional industry’s smoke and mirrors to make you think they’re an advisor. This means that you’ll have a fiduciary on your side – someone who’s bound to the same principle of “First, do no harm,” as your doctor. You’ll have hired someone who goes to work for you every day, and who you can count on to educate, guide and counsel you toward reaching your full financial potential. While it will be their job to listen to what it is you want, it’s their responsibility to protect your financial well-being. If you ask them to do something they believe would threaten your well-being, it’s their job to explain why you shouldn’t. Just like your doctor would do if you asked them to perform an unnecessary or risky procedure.

In the end, your decision for hiring a financial advisor comes down to what you value in a person who is responsible for playing this role in your life. After all, this is your financial life, no one else’s. But just remember, you get one shot at your financial journey. And failure is not option. So, I would caution you to hire wisely. I promise, if you find the right advisor, you’ll never want to leave them, because they’ll help you live the life you want.

5 Reasons Why You’ll Never Find the Motivation to Change Your Life

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The video above is taking the viral world by storm. It features motivational speaker and author Mel Robbins explaining why motivation is garbage. And after watching it, I couldn’t agree with her more.

We commonly resort to thinking people who don’t execute on their ideas simply aren’t motivated. They’re lazy. They lack self-confidence. They just don’t want to do it. This couldn’t be farther from the truth.

You already know what you want to do in your personal life and in work. You already know why you want to do it. By all societal standards, this makes you “motivated.” But here’s the secret – knowing what to do, and why you want to do it will never be enough to make you do it. Motivation is garbage.

Nike Neglected to Tell the Whole Story

If the slogan for life was “Just do it,” we’d all be much happier. We’d all have everything we want.

But it’s not that simple. Think about all the things you want – why don’t you just do it? Because even though you know why you want to be an entrepreneur, you don’t feel like taking that risk. Because even though you know why your big idea has merit, you would feel hurt if it got shot down. So, you never open the doors. You never tell your boss. You never “just do it.” And nothing in your life changes.

That’s because when you put your feelings and thoughts in the ring to duke it out, your feelings will win every time. If you don’t “feel” like doing it, if you feel like it’s too risky, if you feel you could be ignored, then you’re not going to do it. Period. Not because you don’t know what to do and why, not because you’re not “motivated,” but because you can’t conquer your own feelings. Because you can’t outsmart your brain. Because you decided, all on your own, not to act.

Motivation is garbage.

5 Reasons Why You’ll Never Be Motivated to Change Your Life

Have you ever asked yourself why you can’t do the little things you know will change your life? To the point where they’re so simple, you almost start to wonder what the heck is wrong with you?

I have. Many times over. I could never figure it out – I couldn’t understand why doing the things that would change my life for the better were so hard to do. Even something as simple as finding 15 minutes a day to read a good book. But after listening to Robbins, what I couldn’t find reason in finally made sense. And I want to share what I’ve learned with you, in the hopes that you’re search will come to an end as well.

Here are the five reasons why you will never be motivated to change your life:

1. You hesitate. A new idea for a business, a product, a new paint color in the living room, whatever it may be, springs into your head, and then it happens – you hesitate. You start thinking about what you’re thinking about. This sends a stress signal to your brain, prompting it to wake up essentially. And herein lies the starting point for the whole problem. Your brain will recognize these hesitations as indicators that something is out of the ordinary, and will start to go into protection mode.

2. Your brain will stop you before you can start. Your brain is designed to protect you from things that are scary, uncomfortable, or difficult. But to change, to do the what you want, you have to do things that are scary, uncomfortable, or difficult. Enter protection mode – your brain will discourage you from doing these things even before you do them, every single time.

3. You’re only motivated to do the things that are easy. Change isn’t easy – it’s scary, uncomfortable, and difficult. Because of how your brain works, it will magnify the risks associated with change. It will discourage you from acting on new ideas, because your brain initially perceives them as problems. And it’s designed to protect you from them. This makes the problem even more complex – you’re never going to feel like doing the things you know you should do. So, you won’t. You’ll stick with what’s easy and familiar.

4. You keep waiting for motivation. Technically, you’re already motivated. You already know what to do and why you need to do it. So, why don’t you act? Because you keep waiting for that moment when you’ll feel ready. That moment when you’ll have just enough courage to do it. You keep waiting for motivation to find you, to spring you into action. Well, I have bad news – it’s never going to come. So, you’ll just keep thinking about it. You’ll never start doing, until you stop waiting for the motivation to do it.

5. You let the micro-moment pass you by. You have mere seconds between the formation of a new idea, and when your brain will kill it. This is the micro-moment in time when your idea has the potential to go from thought to reality. According to Robbins, you have five seconds, specifically, to physically act on a goal, or your brain will kill it. Most people will never be able to control their micro-moment – to act rather than remain passive.

Why Does It Matter to You?

At one point or another, you’ve thought to yourself, “I know what I need to do, I just need to find the motivation to do it.” This is a great way to set yourself up for failure – because motivation is garbage. You’ll never find the “motivation.”

Instead, start thinking “I know what I need to do, I just need to take the first step to actually do it.” You need to take control of the micro-moment. Robbins has been explaining this psychological shift for years, through her concept of the 5 Second Rule. Her TedX Talk on it has been viewed almost 10 million times.

If you want to pay off your credit card debt, cut them up. Right now. Want to reach your full financial potential? Start at square one and write down your monthly savings goal. Ready to lose weight? Set an alarm that prompts you to go to the gym. Have an ideal life you want to live? Cut out the first picture for your vision board. Have a business you want to start? Write down the name of the first person you need to call. Whatever it is you want to do, take one action right now to help you achieve that goal. When you take action, you start to build new habits, and erase current ones.

But until you realize that motivation isn’t enough to make you act, your life will never change. When you keep waiting for that perfect moment in which motivation will find you, your life will never change. If you don’t stop hesitating, if you don’t take control of the micro-moment, your life will never change. Until you stop thinking and talking, and start doing, your life will never change. You’ll wake up 10 years from now and still be in exactly the same spot. How miserable does that sound?

Instead, make the decision to act in a way that changes your life. Changing your decisions changes everything.

These 15 Bad Habits Are Stopping You From Reaching Your Full Financial Potential

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Everyone wants to reach their full financial potential. After all, that’s why you work, why you invest, why you do it all – to live the life you want. But unfortunately, most people practice bad habits that limit their potential.

I’ve been there. I made those choices that seemed insignificant at the time, but that later compounded and became the heavy weights that held me down. That’s the tricky part – sometimes you don’t realize you have  bad habits until much later. I let myself get in my own head, I blamed others around me, and nothing changed much in my life.

Then I had my day of reckoning. I decided that if I wanted to radically change my life, if I wanted to create an environment that furthered my most important goals, rather than being a product of my environment, that was on ME. I had to make that happen.

And it all started with overcoming my bad habits.

Overcoming Your Inner Beach Bum

I would dare to say that no one is born doomed to fail – you weren’t. We’re all born with the same potential for success and failure. To reference Jeff Olson who said it best in his book The Slight Edge, “We all have the potential to be a beach bum and a millionaire within us.”

You see, something I’ve learned over the years is that secret to success is found in your daily routine. And you’ll never change your life, you’ll never reach your full financial potential, until you change what you do daily. Until you change your habits. I didn’t – until the day the secret to success hit me like a ton of bricks.

The secret to success is simple – successful people have good habits, and unsuccessful people have bad habits.

Now, I won’t lie to you and tell you that changing your habits is easy. It sure wasn’t an easy, overnight process for me. Heck, it’s much easier to be a beach bum than it is to be a millionaire. It took years of coaching seminars, reading books, and learning from my successful peers for my day of reckoning to occur. For the realization that my own bad habits were holding me back to take root and bloom. But once it did, my life changed for the better in every way possible.

15 Bad Habits Holding You Back from Reaching Your Full Financial Potential

You shouldn’t short-change yourself when it comes to your quest for personal development. I encourage you to take advantage of every resource you can get your hands on. And this quick list is the perfect one to get you started.

Here are 15 bad habits that are holding you back from reaching your full financial potential:

1. Sleeping in as late as possible. Not everyone is a morning person – then again, not everyone is financially successful. Every successful person I know starts their day before the sun comes up. This time should be used to focus on you – organize your day, enjoy a cup of coffee while you watch the news, exercise, prioritize your goals for the day. You get the point. Being an early riser can make you a much more productive person. And higher productivity means a higher likelihood of success.

2. Not paying yourself first. I’m about to share one of the easiest, most boring get-rich secrets with you – pay yourself first. This is one of THE most important ingredients in reaching your full financial potential. You should focus on saving 15%-20% of your income annually. If you can’t do this, everything else has to work that much harder to pick up the slack. You have no safety net, and it puts additional pressure on other areas of your financial life.

3. Neglecting your physical health. You may not think your physical health has anything to do with reaching your full financial potential, but it does. Again, successful people make their health a priority. When you’re unhealthy, you tend to be more tired and less productive. In fact, on days when I don’t work out, I can see a difference in my energy throughout the day. Exercise is one of the best, natural ways to boost energy, relieve stress, and sharpen your mental focus.

4. Neglecting your mental health. Be sure that you don’t overlook your mental health, either. This is just as important as your physical health. Every day, you should spend some quiet time inside your mind. You can use this time however it will most benefit you. Maybe it’s reflecting on the things you’re grateful for, or visualizing your day ahead and how you can make it successful.

5. Racking up bad debt carelessly. Bad debt is equivalent to short-term, high interest debt. Credit cards are a great example. I would recommend living by the following saying most of the time – if you can’t pay for it in cash, you probably can’t afford it. Now, of course there are special exceptions, but this is generally a good rule of thumb. Carelessly racking up credit card to live a lifestyle you can’t afford – and not saving your money – is a recipe for disaster. And a sure way to never reach your full financial potential.

6. Neglecting your own personal development. Successful people take the time to improve themselves. And one of the best ways to do this is by reading. Warren Buffett, Bill Gates, and the like all have one thing in common – they’re voracious readers. Expanding your knowledge pushes you to dream bigger – to never give up, even when you’ve reached one success milestone. Your bank account and your personal development are correlated. If your net worth doesn’t match your personal development, it will shrink back down to where your potential limits it. Spending just 15 minutes a day reading a good book can do wonders.

7. Overlooking your true cost of living. In other words, not paying attention to what the “small” things are really costing you. For example, say you buy a $5 coffee every morning. This means you’re spending $960 a year on coffee. But what it’s really costing you is what could have done with that money instead. What if you’d invested that money annually instead? Earning 8% growth, that would produce a gross value in 10 years of $15,020. Now, I’m not saying you have to sacrifice your morning Starbucks routine. But you do need to be aware of your true cost of living. You have to implement strategies to offset your lost opportunity costs.

8. Not accepting responsibility. A lot of people struggle with the concept of responsibility. Maybe that’s because we say it in ways that can sound negative – you know, “grow up and take responsibility for your actions.” But responsibility isn’t a form of blame or something you should avoid. Accepting responsibility means that you’re the cause of everything that happens in your life. It means that no one is responsible for your success or failure but yourself. Until this sinks in, you’ll struggle to find the motivation necessary to reach your full financial potential.

9. Speculating and gambling with your money. Or engaging in bad investor behavior period. Timing the market, stock picking, listening to market forecasters, and making emotionally charged investment decisions are all bad habits. Sure, there’s an opportunity for success if you engage in these behaviors. But there’s an even greater opportunity for failure. You get one shot at your financial journey – ONE. And failure is not an option.

10. Thinking with a scarcity mindset. Success starts with your mindset – your mindset creates your attitude, creates your behavior, creates your results, creates your life. A scarcity mindset traps you in thinking you can’t afford to practice good habits, your past dictates the future, and you’ll never have enough while others have plenty. It traps you in thinking “I can’t do that.” And you’ll settle for what is rather than breaking through to what could be – to living the life you want.

11. Hanging out with the wrong people. You’ve probably heard that you’re the average of your five closest friends. Well, it’s true. If you hang out with people who aren’t goal-oriented, striving for something better, challenging themselves, or working toward financial independence, you probably won’t either.

12. Not setting goals. You have to set financial goals for yourself. How else do you measure your progress? How else do you have something to look forward to? You need to write your goals down on paper, and monitor your progress regularly. But make sure that you’re capable of accomplishing them. Otherwise you’re setting yourself up for failure. A good way to do this is to make sure your goals are SMART – specific, measurable, achievable, realistic, time-based.

13. Searching for the instant button. You’ll never reach your full financial potential if you’re always searching for the instant button. Success isn’t instant. You’re not going to see the results from your hard work in five days, five weeks, or even five months. It’s not until the summation of all those good habits overtime produce an end result that the drastic difference is realized.

14. Procrastination. “There’s always tomorrow.” This justification should not be part of your philosophy. What if you were to die today? what would your tombstone say? Would it be complete, or would there be much left unsaid? Now, if we could extend your life, what would you change? What more could you accomplish? What would be the culmination of your life that people would remember? It’s one thing to say you want to reach your full financial potential. It’s another thing to do it. But you have to stop talking and thinking, and start doing.

15. Neglecting to define your “why.” Before you can reach your full financial potential, you have to define your “why” for money. What is it that money truly enables you to do? What purpose does it serve in your life? What are your most important values? Are your financial behaviors furthering them? Only then can clearly define your “why” – the thing that drives everything you do. Until you define your why, you don’t have anything to fight for.

3 Reasons Why You Should Value Mind Over Money

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We live in a world full of information on how to find financial success, enough information that everyone should be able to reach their full financial potential. It’s the truth staring all of us in the face, but that only a few can clearly see. That’s because 95% of people are missing the crucial first ingredient in the recipe for success – cultivating the right mindset.

A Tale of Two Minds

There are two general mindsets – scarcity and abundance. Not only is a scarcity mindset the most common one, but it’s also a common denominator among those who never reach their full financial potential. This mindset gives you the illusion that you never have enough. It leads you to believe you can’t afford to practice the good habits that inch you closer to financial success. You settle in thinking that you can’t achieve more than where you are, and accept that your dreams will never become a reality. It’s the curtain that hides that truth staring you in the face.

A scarcity mindset makes you think “I can’t do that.” An abundance mindset makes you think “How can I do that?” This pivotal phrase is the first step in pulling back the curtain. Unlike scarcity, an abundance mindset helps you view every situation you encounter as an opportunity for success. You understand that if you continue those good habits that foster success, you will eventually achieve your goals and then some. This is how you break through the glass ceiling between what is and what could be. It’s how you make your dreams a reality and live the life you want. It’s how you put yourself in a position of control over your destiny, and become the CEO of your financial life.

How to do Something Isn’t Doing it

You can easily find the answers for financial success. I educate my clients every day on how to reach their full financial potential, I give them the answers. But what many people lack is understanding that the answer is only the how to. And the how to is only information, it’s just the steps to follow for financial success. It isn’t applying that information to help you live the life you want.

This simple fact is the reason you will fail again and again, no matter how many books you read, talk shows you listen to or articles you collect. Knowing how to find financial success is only one piece of the puzzle, and not necessarily the most important one. The other, and more important, piece is applying those how tos in a way that inches you closer to success. In other words, how you do the how to is more important than the how to itself.

I’ll say it again – how you do the how to is more important than the how to itself.

3 Reasons Why You Should Value Mind Over Money

This leads us to my central message – reaching your full financial potential is impossible until you learn to value mind over money. Here are three reasons why:

1. Success starts with your mindset. The human psyche is linear – your attitude creates your actions, creates your results, creates your life. Therefore, you may think all you need is an attitude adjustment. But that’s still not enough. What creates your attitude? Your mindset – your mindset creates your philosophy, creates your attitude, creates your actions, creates your results, creates your life. A scarcity mindset means you will live and behave accordingly. An abundance mindset means you will live and behave accordingly.

2. Success means doing what others won’t. Financial success, or success in any area of your life, is simple – do the little things that breed good habits consistently. Even the little things that seem insignificant. What’s difficult is actually doing the things that push you closer to success. They’re easy to do, and just as easy not to do. So, you have to change your priorities, the way you go about your daily life in general. You have to change your mindset, the way you think about the decisions you make. Successful people are willing to do what others are not willing to do.

3. Success means mastering the mundane. Those who succeed understand the difference between success and failure lies in the choices you make every day. Simple, positive actions, repeated over and over, that push you toward success. Or simple errors in judgement, repeated over and over, dragging you down toward failure. And again, doing what it takes to be successful isn’t difficult – there’s nothing difficult about mastering the mundane. Saving an extra $100 a month isn’t going to make you rich overnight. But that positive action, compounded and growing over time, will. You must simply make the conscious effort to view your life through the lens of abundance, and be willing to consistently do the things that others are not.

Why Does it Matter to You?

Benjamin Franklin once said, “An investment in knowledge pays the best interest.” I would amend this to say, “An investment in your personal growth and development pays the best interest.”

If you were to ask me if I would rather have a million dollars in the bank or a million-dollar mindset, I would opt for the million-dollar mindset all day long. Sure, it would be great to have a million dollars, but it’s even better to be worth a million dollars. If you start your journey toward financial success with a million-dollar mindset, it won’t be long before you’ve reached your full financial potential. But if you don’t have the right mindset, all the money in the world can’t guarantee your ability to succeed. This is because how much money you have and your level of personal development share a symbiotic relationship. They are constantly working to balance each other out. If your net worth doesn’t match your personal development, it will shrink back down to where your development limits it. But, if you’re always challenging yourself to grow, working on your personal development, then your net worth will rise to catch up with it. You can either become as small as the balance in your bank account, or as big as your greatest dream.

As someone who has spent more than a decade educating, guiding, and counseling people to reach their full financial potential, I can tell you that not everyone is inherently wired to succeed. But that doesn’t mean you should be tossed to the side. Your future can still be a successful one, you can still live the life you want to live. You just need to cultivate the right mindset.

4 Reasons Why Market Timing Fails as a Money Maker

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Markets will easily rattle you. A couple hundred-point swing here. A doomsday headline there. But before you go and flee the market or try to strike it big through market timing, you have to stop and consider the consequences.

The Dilemma

Market timing may be one of the most controversial topics around – many say it’s impossible, while the exact same number of people will claim they can do it perfectly every time.

It’s true that markets move in cycles and general predictions can be made about what to expect. But, this is exactly where investors get themselves in trouble. These facts do not mean that you can accurately and consistently get in and out of the market at the exact right moments.

Why, then, do investors continue to engage in this self-destructing behavior? Maybe it’s the same reason that we’re all pulled to the neon lights on the Las Vegas Strip – we all want to prove that we can win big and beat the game. Sometimes you do, and when you do, luck is almost a bigger factor than anything. But most of the time you don’t. When you don’t, it’s easy to keep pouring money into the machines to try and prevail. What usually happens is you fly home with your tail between your legs, in a deeper hole now than when you arrived.

4 Reasons Why Timing the Market Fails as a Money Maker

Here are four reasons why timing the market fails as a money maker:

1. It almost always hurts your performance over the long-term. A recent analysis of investor behavior from SigFig found that during the market correction in October 2014, roughly one in five investors reduced their exposure to equities, mutual funds and ETFs, with 0.6% selling 90% or more. While this may have seemed like a smart move to investors at the time, SigFig found that the more investors sold, the worse their investments performed. Investors who panicked the most had the worst 12-month trailing performance of all groups.

2. It can cost more than you will make. Market timing prompts investors to be active. While active investing isn’t necessarily a bad thing, it can be costly. And the more active you are, the more you will pay in costs. Every time you make a trade, you will incur fees associated with the cost of making that trade. Investment decisions also have tax consequences. If you try to time the market and make trades without regard for the tax impact, you can find any returns you may make quickly squashed by a tax bill.

3. You have to be right twice. Gambling is easy – you only have to be right once to make it big. Market timing is a different animal. You have to be right twice in order to win, because investing has two sides, buying and selling. To be a master at market timing, you have to be able to sell at the precise moment that the market has reached the top of its climb and can’t go any further. Then, you have to be able to buy at the precise moment the market bottoms out, before it rebounds. Do you have the guts to make that bet?

4. Your focus is on reward, not risk. Investors who time the market are in it to reap big rewards – no matter the risk. You’re chasing the high of making it big, of greed. When you don’t get that reward, you run into big problems. A focus on winning doesn’t prepare you for a loss. You have no exit strategy when things go south, and they often will. In case you’ve forgotten, higher risk doesn’t guarantee higher returns. It just means a higher chance of you losing your money. If you have a high probability of losing money, you better have something to catch you when you fall.

Why Does It Matter to You?

The truth is that investors who adhere to one extreme or the other – impossible or possible – regularly find themselves less successful than investors who try to find a happy medium.

Everyday market volatility can do enough harm to your returns, without you throwing in a little extra turbulence yourself from trying to time the market. In fact, volatility is what makes market timing difficult to do, because markets can rise and fall close together. Reaching your full financial potential depends on engaging in the right types of active investing, on a balancing act between your active and passive strategies. And this doesn’t include market timing. The only form of active investing proven to work is trend following. To take it a step further, indexing almost always outperforms active investing. This is why your main goal as an investor shouldn’t be to strike it rich from one big pop of luck. Rather, lower volatility and consistent returns – even if they’re lower returns – will increase your dollar growth, make for a smoother investment ride, and help you avoid bad investor behavior by keeping you disciplined.

Our investment strategies are built on these very principles. They move with the market, but can avoid the big declines. They limit investor exposure while still capturing upside potential. Remember, it’s not timing the market that drives your success, but time IN the market.

The 4 Rules of Financial Institutions

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Breaking news alert – the financial industry has an agenda for your money! Okay, no offense, but if this is breaking news to you, then you need to read this article more than most.

Yes, the financial industry has an agenda for your money. Everywhere you turn, almost every solution you’re offered has their best interest at heart, not yours. But, shouldn’t your financial actions support your most important goals? Shouldn’t the effort you’re putting in be working to further your best interests? Absolutely.

Whose Agenda Are You Furthering?

If you fail to acknowledge the simple fact that the institutions have designed things mostly to benefit themselves, you may find yourself never living the life you envisioned. Essentially, the game of finance is just that – a game. Successful players take the time to understand the rules and instead of admitting defeat, figure out how to make the rules work to their benefit instead.

Now, the point of this isn’t to paint the traditional financial industry as the enemy. Besides, making them the enemy doesn’t do you or I any good, we still have to deal with them every day. But there are in fact rules that the financial industry adheres to. Rules that you need to be aware of, as they can limit your financial success. You can’t change their agenda or the rules they stipulate for the game. But, you can define the way that we live and work within them, and bend them to your advantage.

The 4 Rules of Financial Institutions

The traditional financial industry has four core rules that they live by:

1. They want your money. This simple rule is what starts it all. You want to save for retirement? Here’s an IRA. Oh, you want your employer to help you save for retirement? Here’s a 401(k). When you’re ready to save for your child’s college education, pick from our selection of 529 plans. And the list goes on. The institutions have designed solutions for your biggest needs simply because of rule number one – they want your money.

2. They want your money systematically. Once you give the institutions your money, they want to make sure that you keep giving it to them, on the same day, every moth, year after year. Think about 401(k) contributions – these often come straight out of your paycheck. People often make IRA contributions on a schedule as well. Many times, we operate in ways that are convenient for us, hence paycheck deductions. Yes, the institutions do a good job of tricking us with convenience.

3. They want to hold onto your money for a long time. All of that money you’re putting into your 401(k) is locked away until you’re 59 ½. And just in case you get antsy before that, you’ll find yourself slapped with taxes and penalties galore should you try to pull it out. Isn’t it funny how you have to pay to get your own money back? For all of those responsible people who want to keep saving into their IRA past this same age, don’t worry – they’ll hold onto it for you until your 70 ½ .

4. When the time comes, they want to give back as little as possible. Money that you take out of your 401(k) goes in pre-tax. That means when you go to take it out, you’ll be paying taxes on it. The same goes for an IRA. This is different than a Roth IRA, where you put in post-tax money. Concerning IRAs, they also don’t want you to let those sit and grow for too long. They’ll keep it until you’re 70 ½ , but then you must start taking distributions from it. This lowers the principle, which lowers the return.

Why Does It Matter to You?

Yes, you can’t change the rules of the financial institutions. But you can change how you live within them. And I’m not trying to trash 401(k)s, IRAs or any of the other things we’ve mentioned here. These aren’t “bad” things to do – in fact, they can be essential tools to help you succeed financially.

What is important for you to take away is that part of winning the game of finance is mastering a balancing act. Financial success depends on a healthy balance of money that is under your control, and money that is out of your control. Based on these rules, all of your money shouldn’t be tied up in long-term savings accounts. Life happens, that’s a fact. When it does, you need to be able to access your money when you need it. For instances where your money is tied up, you need to know what role these strategies are playing and exactly how they fit into your complete financial life.

You don’t lump all of your goals into one end all, be all goal. You have multiple goals, multiple things you’re working toward. Money is the same way. You have to dedicate different buckets of money to different goals. And it’s not just about having a lot of buckets – it’s about having the right ones that are best suited to the purpose that money is serving.

Let me put it this way – one of my cardinal rules for reaching your full financial potential is to never have more money out of your control than in your control. Remember this, and you can go far.

Memories from a Millennial: 7 Simple Ways to Teach Your Kids About Money at Every Age

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As important as money is to our everyday lives, it’s always baffled me what little is done in the education system to teach your kids about money.

I guess I can’t say they didn’t try though. When I was in elementary school, we took a field trip to a place called Exchange City. It was a mock town set-up in a children’s learning center. In the town, everyone had a job that they were paid for, and could then go spend their money in the stores. And I guess I did leave high school knowing that an IRA was used to save for retirement.

They’re Always Watching

Much of what I learned about money came from my parents. I still remember when my parents made me open my first savings account at a bank when I was teenager. I watched how my parents spent money, listened to how they talked about it my entire life. While I never wanted to for anything growing up, I understood the importance of not living above your means. I understood the importance of saving, and that your wallet should never be full of credit cards.

However, I graduated college never having paid a bill in my life. My parents made my brother and I the promise that if we went to college, worked hard and graduated in good standing, they would take care of housing expenses. And guess what my dad made me do when I signed my first lease in the “real” world? He made me pay the deposit, first month’s rent, and moving costs all by myself. To go from never paying a bill in my life to dropping a few grand – not to mention the cost of living I would incur moving forward – knocked the wind out of me. While I’m forever grateful for the opportunities my parents gave me, that was one of my biggest reality shocks to date.

Now at age 26, I’m actually very proud of the financial progress I’ve made. That savings account my parents made me open over 10 years ago I still have – and it has a very healthy balance in it. I’ve started saving for long-term goals. But all of this is because of what my parents taught me about money. I didn’t learn my good habits from school – I learned them from my parents.

7 Simple Ways to Teach Your Kids About Money at Every Age

Giving your children this foundation is essential. I don’t know where I would be today if my parents hadn’t done it for me. And it’s easier than you may think.

Pulling from my own childhood memory bank, here are seven simple ways to teach your kids about money at every age:

1. Waiting to buy something you want. I was in the store the other day, and in front of me walking down the aisle a boy was bugging his mom for a toy. When she said they didn’t have money for that right now, he fired back with “Just put it on your credit card.” Kids are smart. If you’re constantly whipping out your credit card to buy whatever you – or they – want on the spot, they learn they can buy anything, any time. Rather, teach them the importance of saving their money to make a purchase. This is a hard concept for even most adults to grasp, but the positive effects that come from mastering it are invaluable.

2. Designate money for saving and spending. I remember that I always had “spending” money and “saving” money. In fact, I still do as an adult – you probably do too, even if you don’t consciously call it that. Kids need to understand that you can’t spend everything you make. A portion of their money should be put into savings every time they earn it. Then, the other portion can be used for their spending money. This starts to form the good habit of “paying yourself first” at a young age – something I’m very grateful that my parents taught me.

3. Congratulate them on saving their money. Saving money is boring. It’s way more fun to spend it. And your kids will quickly realize this once you start giving them money. Tell them this upfront, be direct with them. But, stress the importance of this “boring” habit. And make it fun – when they’re younger, track their savings progress and make a big deal about how much they’ve saved. Show them how much they could have if they keep saving, talk through it with them and tell them how much they need to reach their goal and when they’ll reach it.

4. Show them how to spend money wisely. This is probably the second most important lesson. Kids need to understand that money is finite – once you spend it, it’s gone until you can earn more. Be firm, and don’t let them dip into their savings. That money is only for emergencies or unexpected costs. If they buy that video game, they can’t buy that toy. When they’re older, involve them in some of your financial decisions to show them your reasoning. This helps them weigh decisions and understand those decisions have consequences.

4. Don’t hand out money for free. One of the biggest mistakes you can make is giving your kids money for no reason. This can teach them that they don’t have to work for money. My brother and I had to do chores in exchange for an allowance when we were younger. If we worked hard and got good grades, we got $5 for every A and $50 for straight As. Do I need to say how hard I worked to get straight As in high school? If I was in sports, I still had to do chores for an allowance, even though my parents did help fill in here and there. If I wasn’t in sports and was old enough to have a job, that was my only option. Mom and dad weren’t handing it out for free.

5. Make your kids get a job. As annoying as it was at the time, I’m so glad that my parents made me get a job when I was teenager. Not only does it teach your kids responsibility, but it opens their eyes to many things about money, like taxes. They’ll also take pride in earning their “own” money, not money from mom and dad. This isn’t only applicable to teenagers either – when your kids are younger, treat chores like their job.

6. Compound interest is powerful. Even young kids can grasp the basics of this concept. Give them a certain amount of extra money every month – say 50 cents or a dollar. Tell them this is the interest that their money earned, and talk through it with them. Explain to them that money can make money. Once they’re teenagers, a good idea is to have them open up a bank account. While interest on savings accounts can be low, it still teaches them the foundation for how it works. This can help them understand the importance of saving even more, and how it can help them when they start investing for long-term goals as an adult.

7. Explain the concept of “credit.” A crucial lesson to teach your children is that using a credit card means you’re using borrowed money. I remember seeing my parents put things on their credit cards when I was younger, but not grasping how credit worked until they actually explained it to me. Teach your kids that purchasing items with credit cards is essentially making a purchase with borrowed money. You have to pay that money back every month, and if you don’t, you’ll pay extremely high interest. This is a great plug for telling them you should never charge more on your credit cards than you can afford to pay off in a month.

Why Does it Matter to You?

Parents, knowing how to teach your kids about money is crucial. Of all of the lessons you will teach them, lessons in money are some of the most important ones they’ll get. It will shape their view on money for their entire life. It lays the foundation for whether they will fail or succeed financially. Think back to what your parents taught you about money, about the things they did with money or how they spoke about it. Chances are, you still think and talk about money in a similar way. Your kids will be thinking and talking similarly when they look back 20 years from now. And guess what? What you teach your kids about money, they will teach theirs. Give them the tools to succeed.