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Chart Your Course - An Excerpt from my Upcoming Book

As some of you know I have been working on a book project. Like many things in life the process and effort has proven to be more time consuming than I would have imagined. Hopefully the book will be completed soon. I estimate it will be available in the next nine months. The publisher is Advantage/Forbes Books.

While doing some final work on the draft I thought I would include an excerpt I hope you find interesting and informative.

Chapter 1: Chart Your Course

When you have too much confidence, you buy anything. When you have too much fear, you don’t do anything. The truth is somewhere in the middle. If things are either too bad or too good, you have to get in the middle.

Ten years ago, I brought in an account that was worth $12 million. Pretty exciting, right? Over time, we did an excellent job with that account, and in the last six months, the clients returned and asked us to take over managing $50 million. As you may have noticed, they didn’t return overnight. They watched what we could do, and they didn’t yank out their money the first time they didn’t like what was going on with the economy.

Building wealth is like gaining attention in the marketplace. When I look at my own career and those of my colleagues and clients, I can see that gaining attention requires three things: visibility, recognition, and respect. Anyone can be visible, and after you’ve accomplished that, you have to gain recognition, which is more long-term. Last comes respect. Once you’ve achieved that, it grows over time. Money, like respect, is cumulative. You can’t gain it if you’re up and down and all over the place. You have to weather the circumstances out of your control and stay constant.

The term is sustainable, and I was using that long before it became a buzz word. If you get rich quick, chances are very good that the wealth you’ve acquired that way won’t be sustainable. That’s one reason lottery winners are more likely than other Americans to declare bankruptcy within the first three to five years after they win the millions that are supposed to change their lives.[1] More about that shortly.

Sustainable Wealth: Your Goal

Wouldn’t it be great if you had a map to follow that would lead you just to the right amount of money you need to live a wealthy lifestyle? That’s not going to happen until you can pinpoint what the right amount is—for you. Before you chart your financial course, you need to understand your goal. That’s because there isn’t just one map, but many. Some of us choose different routes, and some don’t chart a course at all. Exploring the country or the backroads of your city can be fun, but when it comes to your future, a well-thought-out strategy will lead you to your goal. That means you need to know where you are starting and where you want to end up.

This is the time I have to tell you that, “I want to be rich,” is not a goal, although if your desire is strong enough, you may be so motivated that you seek out a plan. “I want to be happy,” isn’t a goal either. These are generalizations. You need to get specific. As Robert Kiyosaki said, “It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”

Fortunately, even after Peggy caught me counting money on our wedding night, she decided to stick with me anyway, and when we set out on the road of life, we had specific plans. We determined what we wanted, how to go about getting it, and then we did what was necessary.

Of course, life does not always go as planned, and when it doesn’t, you need to adapt. However, that’s no excuse for not having a course of action. Just as is the case with a real map (including the one on your phone), you may hit a dead end or a detour. Then you readjust and start again. Because of my discipline and adaptability, I did not just meet my goals, but I exceeded them by becoming wealthier than I intended earlier than I expected. Still, my goal was sustainable wealth that would take care of Peggy and me and, I hoped, the generations that followed us.

I started with a dollar figure, and that’s what you need to do. Some people say wealth is millions of dollars. Some define wealth as not having debt. Others say that wealth is being able to retire at a young age or travel the world or own a vacation home or drive a fancy car. You fill in the blanks.

Merriam-Webster defines it this way:

1: abundance of valuable material possessions or resources

2: abundant supply: PROFUSION[2]


More than anything, wealth is being able to live your life the way you want to.

Let me say that again. Wealth is being able to live your life the way you want to.

Wealth is having enough money to work if you want to, to play when you want to, and to live where you want to. I believe I know what it takes to become wealthy, and furthermore, I believe just about anyone can do it. You just need a little knowledge, a lot of discipline and you too can live the life you want to, not the one you must. Ultimately, wealth is freedom.

Several authors writing about financial planning try to focus individuals on what they call your “number.” This is the amount of income needed in order to pay for everything your salary currently pays for, your day-to-day expenses. This not-so-magic number is how much you would need and plan to earn. Although, at some point, you will need to explore possible numbers and dollars, that process is only part of the equation, not the focal point.

For example, if you work for the government or for some of the older companies still in existence, you may retire with a pension. You may also receive Social Security or have an IRA. Thus, you’ll be able to save less for retirement than someone who is self-employed, who does not have a pension or other sources of income to rely upon and will have to create all his or her income from personal savings and investments.

A better number to consider is how much income you need to retire. We all want wealth, but what’s the dollar figure that you attach to that? Here’s my definition. Wealth is a number that will sustain your lifestyle without your ever having to work another day in your life. It allows you to make choices about your life without being limited by dollars. So, it’s a combination of freedom and security. In an old Kris Kristofferson song, the singer/songwriter/actor describes freedom as another word for “nothing left to lose.” Poetic as that sounds, true freedom is the security of realizing that you can make decisions about your life and the way you live it because you know you will be able to meet your needs.

Your needs may vary from my needs or your best friend’s needs, and that’s the way it should be. Understanding those needs is what will give you the power right now to plan for them. If your dream is to live in the woods and eat what you hunt, then you can be wealthy with much less than most people. If you have a beachfront home and a $2 million lifestyle, you may need more than $50 million. The big life style demands a big invested net worth. to meet your definition of wealthy. That’s right $50,000,000. Think about it.

Regardless of your definition or your magic number, you are going to have to factor in taxes. You also need to know how much you spend in one year for rent or mortgage, transportation or auto, food, insurance, and your gas, water, electric, and phone. You also need to look at clothing, dining, and entertainment costs. Most people have no idea of how much they’ll need when they retire. That’s one of the many goals I hope this book will accomplish and that is to get you thinking about it.

Experts generally suggest you'll need about 80 percent of your pre-retirement income to maintain the same lifestyle in retirement, but that number varies depending on how many of your old expenses will continue with you into that retirement. If you’re not working, for instance, you may no longer have to pay for lunch during the week; however, you may want to continue your gym membership or perhaps spend more money on leisure-time activities.

Later in this book, I’m going to discuss in depth what I see as the challenges of Social Security, which was intended as a supplement and not as a retirement plan. Still, you need to have a general idea of how much you will receive when the time comes. Everything changes, but as I write this book in 2021, your Social Security benefits will be based on an inflation-adjusted formula that considers the thirty-five years when you earned the highest income. That’s not the only way to get a general figure though. The Social Security website will provide an estimate for you. All you need to do is create an account at www.ssa.gov. Then, check out your Social Security statement, where you'll see an estimate of your future Social Security benefits based on your current income and work history.

I always understood why investing early in life was very important to all who wish to achieve financial security.  For those of you who share my concern for their children and grandchildren, my book may help them navigate their way to sufficient wealth to support their life styles. 

Sources: [1] “The Ticket to Easy Street? The Financial Consequences of Winning the Lottery,” Hankins, Scott, Hoekstra, Mark, Skiba, Paige Marta., the MIT Press, 2011. https://www.mitpressjournals.org/doi/abs/10.1162/ The Review of Economics and Statistics REST_a_00114#.VpLMM1J327Q

[2] Merriam-Webster.com Dictionary, s.v. “wealth,” accessed October 4, 2020, https://www.merriam-webster.com/dictionary/wealth.