Well it was the end of August and some friends convinced me to go on a float trip. I’m not sure if they invited me because they knew I’ve never been floating or if they wanted to see if I would show up in a collared golf shirt (I did, don’t judge). Or they needed a designated driver.
Nevertheless, I agreed and on a humid Friday afternoon, we met at a friend’s house, loaded the minivan and headed for the river – deep into the backwoods of Missouri.
The ride down was uneventful, save for the private Facebook page someone created to document our adventures. When we arrived at our destination, I was pleasantly surprised to find that our accommodations were quite comfortable. But I was stunned at everything else I saw: there were hundreds of people everywhere – young, old, wealthy, not so wealthy and from all walks of life – and everyone was partying like it was 1999. Different country music blaring from everywhere, lots of small campfires, dancing, volleyball, monster trucks, American flags and way too many cans of Budweiser and Miller Lite.
So what did I do? Well, I unpacked the minivan and pretty much went to sleep. Tomorrow was going to be a big day for me…
The Start of Something Special
I woke the next morning, made my coffee – yes, I brought my own coffee machine – and wandered outside. And it looked like I was the only one that went to sleep the night before.
But after a delicious homemade breakfast sandwich and two more cups of coffee, we gathered our float gear and stood in line to be bussed to our starting point. And then it started to rain. Not a light summer shower to cool us off; it was one of those Noah-better-build-an-Ark kind of rain. And no one cared. I think everyone decided that we were going to get wet anyway, so does it really matter whether it’s the rain or the river that soaks us? But thankfully after about 20 minutes on the river, the rain stopped.
So as we were floating down the river at the speed of sloth, I started daydreaming. And of course I’m not like most who daydream of world peace or the meaning of life – I started thinking about how this float trip could be compared to financial planning. You remember that I’m the one in the collared golf shirt unloading a minivan, right? So bear with me and I’ll explain the connection. But first, a definition of a float trip is probably in order, especially for those who live on one of the coasts.
Top definition from www.urbandictionary.com: A float trip involves floating down a river in a canoe, raft, or inner tube. You pay a relatively cheap price for your floating device and then you're off. Most people fill up coolers with beer and shots and actually pay for a separate inner tube to use for floating the beverages.
Yea, that’s all there is to it. Anyway, on to how I equate floating (that’s the verb of float trips) to financial planning. Let’s begin.
Before you go on a float trip, make sure you arrive prepared. Luckily, my friends provided me with a checklist, which was as follows:
- Bathing suit
- Water shoes
When I meet with my new financial planning clients, I ask them to come prepared with the following:
- Bank statements
- Insurance documents
- 401(k)/pension statements
- Wills/Power of Attorney
- Mortgage statement
- Social security statements
- Any other debt statements, like credit cards
- Current pay stubs
- Additional monthly expenses
- Dreams and Goals
But unlike float trips, I don’t ask them to bring beer.
Once we go through all of their “data” I always ask them what they want to accomplish – that’s #10 on my list, but it’s really the most important. Then I explain in very general terms, how I can help them pursue their dreams and goals by working with them to develop a financial plan to map their journey.
But invariably, their questions center on the stock market and how it works. So here is what I tell
The River is Like the Stock Market
Comparing the river to the stock market was actually the conversation with my raft-mates too. You see, the river basically goes in one direction. But sometimes you hit some debris or run aground. And occasionally, the river appears to go backwards.
But if you can take a larger view of the river, you’ll see that it basically goes one way. And the stock market really behaves the same way. Taking a long-term perspective, the stock market basically goes up.
Sure there are periods of time when it goes backwards and other times the stock market hits some debris – like oil shocks, war times, inflation, etc. But taking a larger view of the stock market – let’s say decades – and you’ll see that the stock market generally goes up.
But then I keep going and inform them that:
The River Really is For Everyone
I’ll confess: I had no idea what to expect on the river – hence my wearing a collared golf shirt. But I was so thrilled to learn that the river welcomed everyone, irrespective of their background, socio-economic status, religion, gender or any other group to which they might belong. I floated with doctors, high school kids, dogs, CEOs, entrepreneurs, locals, foreigners, moms, dads, and everything in between. The river just didn’t care.
Kind of like the stock market. It really doesn’t care who you are or what you do. It’s going to behave as it wants to behave (or not behave, depending on your perspective). And just like everyone needs to experience a float trip, everyone should consider investing in the stock market (usually through mutual funds, but that’s another topic altogether).
Which brings me to an important warning that most don’t like to hear:
Always Carry a Life Jacket
I was a little surprised – and secretly relieved – that we were required to take life jackets for every person, despite the river only being a few feet deep in most places. Now, we didn’t wear them at any time, but it was comforting knowing they were at least in the raft in case something happened. And there were probably a few times where I should have double-knotted one around the neck of one of my more inebriated friends…
So here’s my question for you: look at your current financial plan and your current investments. Where is your life jacket? Is it in a government bond fund? Maybe a CD? Or just cash? While you may never need it, trust me on this one: it should be a consideration with every financial plan.
Then we get to the fun part, where everyone has an investment idea or scheme that they want to discuss with me. I put this into the category of:
Smart People Can Do Reckless Things
You see, we were about halfway through our float trip and I looked down the river and saw this amazingly old tree that towered over the others with a single branch extending over the water at least 35 feet high. And then I saw people paddling to shore and standing in line to climb up the tree.
Now I’m all for jumping off a tree or a rock or a diving board into the water. In fact it’s fun. But the deepest part of the river under this tree branch was maybe 3 feet deep! And one small miscue and they would land in ankle-deep water!
So why would seemingly sane people temp fate by making this foolhardy leap? Because others were doing it? Because they were adrenaline junkies? Because some part of their reptilian brain said it was a good idea? Why? Why? Why?
And why would people invest in the latest IPO if they know nothing of the company? Or ask investment advice from their kid’s soccer coach? Or take an early withdrawal from their IRA to invest in cousin Sal’s latest idea?
My only conclusion is this: smart people can do reckless things.
Which brings me to my next point:
Enjoy the Journey
Float trips are a lot of fun. Financial planning is a lot of fun. But if you’re not careful, a fun adventure can turn disastrous quickly.
You may end up in the shallows a few times and have to get out of your raft and pull it over some rocks. You will probably end up in the trees at some point, maybe lose your phone to the river and have to chase down an oar or two.
But if you enjoy the journey and don’t sweat the small setbacks, floating – like financial planning – is a wonderful experience. Just make sure you are prepared to avoid the big mistakes.
And one final piece of advice: make sure someone in your group is sober. And it’s usually the financial planner…
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Past performance is no guarantee of future results.
This article was prepared by FMeX.
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