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"It is our choices that show what we totally are, far more than our abilities."
- J.K. Rowling
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Personal Economics - Choices and Consequences
It seems many of us struggle with competing financial goals. We are unable to make choices or establish priorities. We want to buy the new car and take the vacation, not one or the other. We don't like either/or but would rather have this and that. We want the vanilla and the chocolate. Personal economics is about allocating relatively scarce resources through our decisions. These choices have consequences both in the near term and long term.
Specific long term goals should drive short term investment decisions. Oftentimes clients ask us for advice on a specific financial question and we turn the question around so that the answer is self evident based on their goals. Decisions made outside of the goals context are generally where problems originate. The right decision for you and your goals may differ substantially from your colleague or neighbor.
For the main, individuals make decisions, even financial ones, more on emotion than intellect. We spend too much time/effort trying to maximize and optimize results when that usually works at cross purposes to our goals. Financial products usually don't solve financial dilemmas and in fact sometimes they create ongoing problems.
The Net Worth Summary that we review at each progress meeting is a snapshot of all the financial decisions in our life up to that point. How this meshes with our stated long term goals depends on how well our choices have reflected this long term goal driven perspective.
Wealth Rx® provides an experienced, objective approach to wealth management focused on communicating candidly on choices and consequences. We have attached a link to an updated chart titled "Excess Returns of Stocks Relative to Bonds". It provides telling evidence of the core reason we invest in stocks, to obtain premium long term returns.
- James E. Wilson, CFP® My Blog
"Excess Returns of Stocks Relative to Bonds" - This chart shows why we invest in stocks over the long term. There are some five year rolling periods where bonds outperform, but as the length of time increases to 20 years, there has never been a time period where stocks did not outperform. |
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WealthRx® is J.E. Wilson's unique wealth management process, designed with successful physicians in mind. Learn more. Contact 
