You may start off taking a couple of prescription medications and then add to your daily regimen an over-the-counter drug such as an allergy pill, a multi-vitamin and an herbal supplement without informing your doctor or pharmacist. I recently heard on the Dr. Oz Show that if you are taking a combination of more than 6 drugs (including prescription, non-prescription and supplements), you have a 94% chance of a drug interaction.
A 2004 report from the CDC found that deaths from accidental drug interactions rose 68% between 1999 and 2004. Unintentional drug poisonings accounted for nearly 20,000 in 2004, said the CDC, making it the second leading cause of accidental death in the U.S. next to automobile accidents.
As I helped my mother-in-law apply for Medicare last year, I became aware of great service offered by pharmacists and doctors. It’s called a Brown Bag Check-Up. It’s a great way to avoid medication mistakes and cut down on unnecessary medications. You simply gather all of your prescriptions, vitamins, herbal supplements and over-the-counter medications in their original packaging, put them in a bag and take them to your primary care doctor or pharmacist. He/she will:
-Review all of the medications to see if they are the same as those listed on your medical record.
-Double-check the correct dosage strength and how often you take them.
-Make sure you're not taking anything that is outdated or discontinued.
-Assess whether you are taking more than one drug for the same thing.
-Make sure you're not taking drugs that cancel each other out or give you too many side effects.
It is very important to have one doctor aware of all of the medications that you take. At the very least, you should have a list of all of the medications and over the counter drugs that you take and share it with each of your health care providers. It is also helpful to fill your prescriptions at a single pharmacy so that the pharmacist can look for drug interactions and duplications.
While it is essential to be in charge of your health care, look for ways in which you can enlist help from others as well.
By Chris Carleton, CFP(r)
clcarleton@taaginc.com
Monday, October 19, 2009
Monday, October 12, 2009
The Power of Purpose
Over the last few weeks I have been surrounded by friends and family members dealing with the challenges of an aging relative. Their specific situations and circumstances are different, but in each case I have been amazed by how much the attitude of each individual impacts their ability to cope with the issues they’re facing.
The woman who helped care for me before I started elementary school is now in her mid-80’s and has no living relatives, so my parents have adopted her as family. They make meals for her, take her to church, clean her apartment and repair what needs fixed. They are with her nearly every day, but she does not know what to do with her time when they’re not around. She has no significant health problems, but her health is failing and she is becoming very frail because she has no enthusiasm for living.
My great aunt is 101 years old and legally blind. She has lived alone in a small, three story house since her husband died over 25 years ago. A retired English teacher, she loves listening to books on tape, Marshall University basketball games and the news. She tends her small garden in the back of her house and looks forward to trips to Captain D’s for lunch with young friends. She shows no signs of slowing down.
As a financial advisor, I am able to learn from the collective experience of the people I serve. People who are happy and healthy in their 70’s, 80’s and beyond have one thing in common – they have not lost their love of life. They all have a purpose, a reason for living.
As a society we race from one task to the next, and spend very little time in quiet reflection. We need to stop and ask ourselves:
What makes me happy?
What’s missing in my life?
What will keep me going when everything isn’t perfect?
If we take time now to understand ourselves, and know what gives our lives purpose, then we can live fuller lives today and better lives beyond 100.
By Jeannette Jones, CPA, CFP(r)
Jjones@taaginc.com
The woman who helped care for me before I started elementary school is now in her mid-80’s and has no living relatives, so my parents have adopted her as family. They make meals for her, take her to church, clean her apartment and repair what needs fixed. They are with her nearly every day, but she does not know what to do with her time when they’re not around. She has no significant health problems, but her health is failing and she is becoming very frail because she has no enthusiasm for living.
My great aunt is 101 years old and legally blind. She has lived alone in a small, three story house since her husband died over 25 years ago. A retired English teacher, she loves listening to books on tape, Marshall University basketball games and the news. She tends her small garden in the back of her house and looks forward to trips to Captain D’s for lunch with young friends. She shows no signs of slowing down.
As a financial advisor, I am able to learn from the collective experience of the people I serve. People who are happy and healthy in their 70’s, 80’s and beyond have one thing in common – they have not lost their love of life. They all have a purpose, a reason for living.
As a society we race from one task to the next, and spend very little time in quiet reflection. We need to stop and ask ourselves:
What makes me happy?
What’s missing in my life?
What will keep me going when everything isn’t perfect?
If we take time now to understand ourselves, and know what gives our lives purpose, then we can live fuller lives today and better lives beyond 100.
By Jeannette Jones, CPA, CFP(r)
Jjones@taaginc.com
Monday, October 5, 2009
5 Ways to Dodge Debit Card Disaster
Ensure Your Debit Card is a Smart Alternative to Credit or Cash
Whether it’s to avoid carrying a lot of cash or a response to the dramatic changes in the credit card industry of late, people are turning in ever increasing numbers to debit cards as a primary source of spending money. In 2010 alone, an estimated 40 billion debit card transactions will be completed. This can be advantageous to consumers in many ways, provided the potential pitfalls of debit cards are fully understood and avoided.
1. Be Your Own Overdraft Protection
Overdraft protection provides piece of mind, but often not for the consumer. A recent New York Times article mentioned that banks are looking to pocket $27 billion in overdraft fees this year alone. This protection, after all, is really just another form of credit, allowing customers to dip below the cash they actually have in their accounts to avoid potential embarrassment of having misbalanced their checkbook.
If overdraft protection is truly needed, it is just as easy to leave a set amount of money in an account, but omit it from the checkbook journal and forget it is there. This will provide a cushion of real cash to protect the account holder from an overdraft without going into debt or paying a fee.
2. Know Your True Balance
One of the ways that debit cards can confuse is in the way banks report the current versus the available balance either online or on an ATM receipt. Here, it is best to assume that the available balance is the most accurate, as it may include charges made to a debit card within that business day.
That said, care should be taken in determining what a bank includes in the available balance, as some include the amount of overdraft protection in the available balance, even if that means a customer would pay handsomely for using what’s technically “available”, not to mention being out of money and in debt to boot.
3. Don’t Try To Time Your Deposit
Banks are winning when customers play the game of running multiple transactions the same day they expect a deposit to hit. Banks not only hold deposits for several days before allowing them to clear, some are also changing the chronological order of transactions each day so that the most expensive transactions run first, often causing multiple overdraft transactions. For example, if a customer has $500 in an account and transactions that day in the order of $35, $100, and $550, they could be reordered as $550, $100, $35, causing the customer three overdraft fees rather than just one.
4. Be Secure
Debit cards are linked directly to a customer’s account and extra care should be taken when these cards are used. When withdrawing cash, use an ATM located at a bank, rather than free standing machines at convenience stores or other locations. Bank ATMs are much less prone to skimming devices used by crooks to swipe your account information.
Wherever a card is used, debit card purchases should be processed as a “credit” transaction, not a “debit” transaction where a PIN is required.
Most importantly, check accounts often for accuracy. Most banks offer some level of fraud protection, but how quickly they are notified of the fraud dictates how protected a customer truly is.
5. Don’t Lock Up Your Money
Avoid using debit cards when on the road, especially when paying for a hotel room or rental car. These businesses will insure their property is safe by selecting an amount to block on the customer’s account in case of damage. This can be as much as twice the expected transaction amount. So, if a hotel room is to cost $500 for a two-night stay, the hotel may block the customer from using as much as $1,000 in available cash. When in doubt, communicate in advance and find out what the policy is for debit card transactions.
Stay Tuned – Congress in Session
With the overwhelming popularity of the recent legislation involving the credit card industry, politicians will likely be sure to continue that momentum when it comes to the debit card industry. While this is likely to positively impact the consumer, attention should be paid to what the changes are, how they affect the consumer specifically, and what changes the banks make to counteract the legislation to make up any lost income.
By Chip Workman
cworkman@taaginc.com
Whether it’s to avoid carrying a lot of cash or a response to the dramatic changes in the credit card industry of late, people are turning in ever increasing numbers to debit cards as a primary source of spending money. In 2010 alone, an estimated 40 billion debit card transactions will be completed. This can be advantageous to consumers in many ways, provided the potential pitfalls of debit cards are fully understood and avoided.
1. Be Your Own Overdraft Protection
Overdraft protection provides piece of mind, but often not for the consumer. A recent New York Times article mentioned that banks are looking to pocket $27 billion in overdraft fees this year alone. This protection, after all, is really just another form of credit, allowing customers to dip below the cash they actually have in their accounts to avoid potential embarrassment of having misbalanced their checkbook.
If overdraft protection is truly needed, it is just as easy to leave a set amount of money in an account, but omit it from the checkbook journal and forget it is there. This will provide a cushion of real cash to protect the account holder from an overdraft without going into debt or paying a fee.
2. Know Your True Balance
One of the ways that debit cards can confuse is in the way banks report the current versus the available balance either online or on an ATM receipt. Here, it is best to assume that the available balance is the most accurate, as it may include charges made to a debit card within that business day.
That said, care should be taken in determining what a bank includes in the available balance, as some include the amount of overdraft protection in the available balance, even if that means a customer would pay handsomely for using what’s technically “available”, not to mention being out of money and in debt to boot.
3. Don’t Try To Time Your Deposit
Banks are winning when customers play the game of running multiple transactions the same day they expect a deposit to hit. Banks not only hold deposits for several days before allowing them to clear, some are also changing the chronological order of transactions each day so that the most expensive transactions run first, often causing multiple overdraft transactions. For example, if a customer has $500 in an account and transactions that day in the order of $35, $100, and $550, they could be reordered as $550, $100, $35, causing the customer three overdraft fees rather than just one.
4. Be Secure
Debit cards are linked directly to a customer’s account and extra care should be taken when these cards are used. When withdrawing cash, use an ATM located at a bank, rather than free standing machines at convenience stores or other locations. Bank ATMs are much less prone to skimming devices used by crooks to swipe your account information.
Wherever a card is used, debit card purchases should be processed as a “credit” transaction, not a “debit” transaction where a PIN is required.
Most importantly, check accounts often for accuracy. Most banks offer some level of fraud protection, but how quickly they are notified of the fraud dictates how protected a customer truly is.
5. Don’t Lock Up Your Money
Avoid using debit cards when on the road, especially when paying for a hotel room or rental car. These businesses will insure their property is safe by selecting an amount to block on the customer’s account in case of damage. This can be as much as twice the expected transaction amount. So, if a hotel room is to cost $500 for a two-night stay, the hotel may block the customer from using as much as $1,000 in available cash. When in doubt, communicate in advance and find out what the policy is for debit card transactions.
Stay Tuned – Congress in Session
With the overwhelming popularity of the recent legislation involving the credit card industry, politicians will likely be sure to continue that momentum when it comes to the debit card industry. While this is likely to positively impact the consumer, attention should be paid to what the changes are, how they affect the consumer specifically, and what changes the banks make to counteract the legislation to make up any lost income.
By Chip Workman
cworkman@taaginc.com
Monday, September 28, 2009
Concerned about privacy? You should be
You can hear horror stories involving privacy anywhere. There are constant issues over privacy at Facebook. Look, for example, at 10 Solid Tips to Safeguard Your Facebook Privacy and at Could I have my stuff back, please?
We hear repeated warnings about things that just won’t go away or be undone once they are on the Internet. The Digital Guidebook wrote Something to Think About: Your Digital Identity is the New Chastity.
Consider this example from the Electronic Frontier Foundation (EFF), What Information is “Personally Identifiable”?:
Mr. X lives in ZIP code 02138 and was born July 31, 1945.
These facts about him were included in an anonymous medical record released to the public. Sounds like Mr. X is pretty anonymous, right?
Not if you’re Latanya Sweeney, a Carnegie Mellon University computer science professor who showed in 1997 that this information was enough to pin down Mr. X’s more familiar identity — William Weld, the governor of Massachusetts throughout the 1990s.
Gender, ZIP code, and birth date feel anonymous, but Prof. Sweeney was able to identify Governor Weld through them for two reasons. First, each of these facts about an individual (or other kinds of facts we might not usually think of as identifying) independently narrows down the population, so much so that the combination of (gender, ZIP code, birthdates) was unique for about 87% of the U.S. population.
The EFF report went on to say:
But research by Prof. Sweeney and other experts has demonstrated that surprisingly many facts, including those that seem quite innocuous, neutral, or “common”, could potentially identify an individual. Privacy law, mainly clinging to a traditional intuitive notion of identifiability, has largely not kept up with the technical reality.
CNet picked up on the story and wrote How 10 digits will end privacy as we know it. These 10 digits are the five-digit ZIP code, gender, and date of birth. CNet said,
Knowing just a little about a subscriber–say, six to eight movie preferences, the type of thing you might post on a social-networking site–the researchers found that they could pick out your anonymous Netflix profile, if you had one in the set. The Netflix study shows that those 10 de-anonymizing digits can hide in surprising places.
Our physical belongings also betray our anonymity by silently calling out identity-betraying digits. Small wireless microchips–often called radio frequency identification, or RFID, tags–reside in car keys, credit cards, passports, building entrance badges, and transit passes. They emit unique serial numbers. Once linked to our names–when we make credit card purchases, for instance–these microchips enable us to be tracked without our realizing it.
Ask yourself the following
· In what category do you fall? Worried, confident, concerned or unfazed about your privacy?
· Are you thinking about, developing, building, monitoring, and protecting YOUR digital footprint?
· Are you thinking about your footprint when (or not) posting or commenting on blogs, uploading material, or participating on social networking sites?
· Do you keep your personal and professional digital footprint separate?
· Do you just assume that no one will bother to try to find a trail to and about you?
If you aren’t paying attention to privacy yet, now is the time to get your head in the game and take a look at how you live your online life.
Some information in this blog thanks to the blog cross-posted at BlogHer, originally posted Tuesday, September 22, 2009
We hear repeated warnings about things that just won’t go away or be undone once they are on the Internet. The Digital Guidebook wrote Something to Think About: Your Digital Identity is the New Chastity.
Consider this example from the Electronic Frontier Foundation (EFF), What Information is “Personally Identifiable”?:
Mr. X lives in ZIP code 02138 and was born July 31, 1945.
These facts about him were included in an anonymous medical record released to the public. Sounds like Mr. X is pretty anonymous, right?
Not if you’re Latanya Sweeney, a Carnegie Mellon University computer science professor who showed in 1997 that this information was enough to pin down Mr. X’s more familiar identity — William Weld, the governor of Massachusetts throughout the 1990s.
Gender, ZIP code, and birth date feel anonymous, but Prof. Sweeney was able to identify Governor Weld through them for two reasons. First, each of these facts about an individual (or other kinds of facts we might not usually think of as identifying) independently narrows down the population, so much so that the combination of (gender, ZIP code, birthdates) was unique for about 87% of the U.S. population.
The EFF report went on to say:
But research by Prof. Sweeney and other experts has demonstrated that surprisingly many facts, including those that seem quite innocuous, neutral, or “common”, could potentially identify an individual. Privacy law, mainly clinging to a traditional intuitive notion of identifiability, has largely not kept up with the technical reality.
CNet picked up on the story and wrote How 10 digits will end privacy as we know it. These 10 digits are the five-digit ZIP code, gender, and date of birth. CNet said,
Knowing just a little about a subscriber–say, six to eight movie preferences, the type of thing you might post on a social-networking site–the researchers found that they could pick out your anonymous Netflix profile, if you had one in the set. The Netflix study shows that those 10 de-anonymizing digits can hide in surprising places.
Our physical belongings also betray our anonymity by silently calling out identity-betraying digits. Small wireless microchips–often called radio frequency identification, or RFID, tags–reside in car keys, credit cards, passports, building entrance badges, and transit passes. They emit unique serial numbers. Once linked to our names–when we make credit card purchases, for instance–these microchips enable us to be tracked without our realizing it.
Ask yourself the following
· In what category do you fall? Worried, confident, concerned or unfazed about your privacy?
· Are you thinking about, developing, building, monitoring, and protecting YOUR digital footprint?
· Are you thinking about your footprint when (or not) posting or commenting on blogs, uploading material, or participating on social networking sites?
· Do you keep your personal and professional digital footprint separate?
· Do you just assume that no one will bother to try to find a trail to and about you?
If you aren’t paying attention to privacy yet, now is the time to get your head in the game and take a look at how you live your online life.
Some information in this blog thanks to the blog cross-posted at BlogHer, originally posted Tuesday, September 22, 2009
Thursday, September 24, 2009
The Secret to Investment Success
We all want to pick a winner. It doesn’t matter if we’re at the racetrack, casino, or investing our IRA. However, investors who spend most of their time trying to pick winners often end up losing more times than not. The number one determinant of your portfolio’s return is your asset allocation – the percentage of your investments in stocks and bonds – and not your superior stock picking ability or market timing. Once you have your asset allocation in place, your behavior will determine your long term success.
It’s easy to look back after a huge market run-up or downturn and think that it was obvious. It then becomes even easier to base our future decisions on recent events, by supporting our gut feeling by selectively looking at information that supports our opinion. We are constantly barraged with headlines that play to our emotions. The media loves to use current events to forecast the future. They want to create headlines that sell magazines or attract viewers, not create successful investors.
Steve Forbes said in a 2003 presentation to The Anderson School of Business, “You make more money selling advice than following it. It’s one of the things we count on in the magazine business – along with the short memory of our readers.”
And just how do investors do with all of the information available about how to pick the winners? Dalbar does an annual study of investor performance versus the indexes. Last year the average equity investor underperformed the S&P 500 by almost 4%. They were down 41.63% vs. a loss of 37.72% for the S&P. For the past 20 years (January, 1989- December, 2008) the average equity investor earned an annual return of 1.87% vs. the S&P 500 average annual return of 8.35%. On a $10,000 investment, this meant a difference of $35,240!
We cannot control the short term direction of the markets. However, if we focus on what we can control - our reaction to the market- our chance of success will be much greater. Author Nick Murray does a great job summing it up: “At the end of our investing lifetime, it won’t matter what your funds did, it’ll matter what you did. And what you did will be a pure function of the quality of advice you got – from one caring, competent (advisor), and not from any number of magazines.”
By Chris Carleton, CFP(r)
It’s easy to look back after a huge market run-up or downturn and think that it was obvious. It then becomes even easier to base our future decisions on recent events, by supporting our gut feeling by selectively looking at information that supports our opinion. We are constantly barraged with headlines that play to our emotions. The media loves to use current events to forecast the future. They want to create headlines that sell magazines or attract viewers, not create successful investors.
Steve Forbes said in a 2003 presentation to The Anderson School of Business, “You make more money selling advice than following it. It’s one of the things we count on in the magazine business – along with the short memory of our readers.”
And just how do investors do with all of the information available about how to pick the winners? Dalbar does an annual study of investor performance versus the indexes. Last year the average equity investor underperformed the S&P 500 by almost 4%. They were down 41.63% vs. a loss of 37.72% for the S&P. For the past 20 years (January, 1989- December, 2008) the average equity investor earned an annual return of 1.87% vs. the S&P 500 average annual return of 8.35%. On a $10,000 investment, this meant a difference of $35,240!
We cannot control the short term direction of the markets. However, if we focus on what we can control - our reaction to the market- our chance of success will be much greater. Author Nick Murray does a great job summing it up: “At the end of our investing lifetime, it won’t matter what your funds did, it’ll matter what you did. And what you did will be a pure function of the quality of advice you got – from one caring, competent (advisor), and not from any number of magazines.”
By Chris Carleton, CFP(r)
Tuesday, September 15, 2009
Top 3 Ways to Guard Your Cards; Crunching the Numbers on Credit Card Legislation
The Credit Card Accountability Responsibility and Disclosure Act of 2009 goes into effect February 2010, but changes are being made by card companies that might impact you today, even if you have great credit. Here’s what you should do to protect yourself:
1. Keep total charges below 20% of available credit. For example, if you have one card with a $5,000 limit and you charge over $2,500 each month to take advantage of the rewards points, it will negatively impact your credit score, even if you pay your bills in full each month. This factor makes up 30% of your credit or FICO score. To prevent this, consider using more than one card. Lenders are watching this ratio as a risk factor and using it as a reason to lower the total credit line for some cardholders. This creates a vicious cycle because a lower credit line increases your total ratio, which then further lowers your FICO score.
2. Keep your cards from being cancelled. Card companies are closing accounts that are inactive to limit their potential risk and expenses. This hurts you in two ways. If it is a card that you’ve had for many years, closing it will have a negative impact on your credit rating, since 15% of your FICO score is based on your credit history. The longer your history, the better. It will also increase the ratio of how much you owe to your total available credit and make it more difficult to keep below that 20% target. To keep your cards from being cancelled use them at least once every 3 to 6 months. Putting a revolving monthly charge on your lesser used cards is an ideal way of preventing cancellation.
3. Read all those boring mailings you receive from your card companies. In the past they were usually privacy statements or other dry material, but lately they have included notices on rate hikes, additional fees, changes in billing cycles, grace periods and other items that impact you. If you don’t know the billing cycle has changed and it causes you to be late, it will impact your credit score for up to a year. Your payment history is 35% of your score – the biggest factor. If they hike your rate and you have a credit score of 730 or above (the range is 300 to 850) consider looking for a lower rate card on http://www.bankrate.com/ or http://www.cardratings.com/ where there is still plenty of competition for your business.
If you aren’t in the market for new credit, you should still check your credit report for errors or suspicious activity on your accounts. You can do that by going to http://www.annualcreditreport.com/ to obtain a free report. You are entitled to one from each credit bureau every 12 months, and if you find a mistake on your report you can follow the instructions on the credit bureau’s website to get it corrected. Correcting mistakes can make a significant positive impact on your score.
It is crucial in this time of significant change to the financial sector to take an active role in protecting your all important credit score. By taking these simple steps, you will be well on your way.
By Jeannette Jones, CPA, CFP®
jjones@taaginc.com
1. Keep total charges below 20% of available credit. For example, if you have one card with a $5,000 limit and you charge over $2,500 each month to take advantage of the rewards points, it will negatively impact your credit score, even if you pay your bills in full each month. This factor makes up 30% of your credit or FICO score. To prevent this, consider using more than one card. Lenders are watching this ratio as a risk factor and using it as a reason to lower the total credit line for some cardholders. This creates a vicious cycle because a lower credit line increases your total ratio, which then further lowers your FICO score.
2. Keep your cards from being cancelled. Card companies are closing accounts that are inactive to limit their potential risk and expenses. This hurts you in two ways. If it is a card that you’ve had for many years, closing it will have a negative impact on your credit rating, since 15% of your FICO score is based on your credit history. The longer your history, the better. It will also increase the ratio of how much you owe to your total available credit and make it more difficult to keep below that 20% target. To keep your cards from being cancelled use them at least once every 3 to 6 months. Putting a revolving monthly charge on your lesser used cards is an ideal way of preventing cancellation.
3. Read all those boring mailings you receive from your card companies. In the past they were usually privacy statements or other dry material, but lately they have included notices on rate hikes, additional fees, changes in billing cycles, grace periods and other items that impact you. If you don’t know the billing cycle has changed and it causes you to be late, it will impact your credit score for up to a year. Your payment history is 35% of your score – the biggest factor. If they hike your rate and you have a credit score of 730 or above (the range is 300 to 850) consider looking for a lower rate card on http://www.bankrate.com/ or http://www.cardratings.com/ where there is still plenty of competition for your business.
If you aren’t in the market for new credit, you should still check your credit report for errors or suspicious activity on your accounts. You can do that by going to http://www.annualcreditreport.com/ to obtain a free report. You are entitled to one from each credit bureau every 12 months, and if you find a mistake on your report you can follow the instructions on the credit bureau’s website to get it corrected. Correcting mistakes can make a significant positive impact on your score.
It is crucial in this time of significant change to the financial sector to take an active role in protecting your all important credit score. By taking these simple steps, you will be well on your way.
By Jeannette Jones, CPA, CFP®
jjones@taaginc.com
Tuesday, September 8, 2009
Counting to 10
One of George Santayana’s most famous, and misquoted, sayings is “Those who cannot remember the past are condemned to repeat it.”
The biggest regret we face from the recent downturn is failing to learn anything as it passes. That is not to say we can avoid another downturn, as surely another bout of greed will come along and create another bubble that will subsequently burst, but perhaps we can at least take away a few ideas that might generate some smarter investment decisions down the road.
A footnote to an article by Dayana Yochim for Yahoo! Finance this month mentions that she regulates herself with a three-day waiting period before making any major money decision. Long a means of gun control and a common rule to waiting to call for a second date, there is no doubt this cooling off period could also be a great tool in governing personal finance on several fronts.
The first is making knee jerk reactions in our portfolios. So many stories are starting to be told about those who finally reached their boiling points right as the market seems to have hit its trough back in March and sold a significant chunk of their equities at the lowest of their lows. While three days might not have saved everyone, certainly taking a breather and realizing this downturn’s place among a lifetime of investing ups and downs might have provided some additional reflection, and an opportunity to avoid selling out right before a historic upswing.
This helps on the upside as well. Greed is a powerful force in convincing investors to stay overweight or even buy more of a certain asset class when things are soaring and can’t possibly go down. If instead, that investor takes a few days to really think about times such as these, they might instead decide to take the respectable profits they have already achieved and buy into that lesser producing asset classes that, while not exciting anyone at the moment, are sure to impress down the road and keep the investor true to their original plan.
Lastly, just think what this waiting period could do for budgets. My wife and I were joking over the weekend that it seems all too easy for a quick trip to Costco for some paper towels and baby wipes to turn into a several hundred dollar shopping spree. By picking a certain dollar amount above which you will wait three days before making the final decision to buy, think of how many wasted purchases could be avoided.
A running theme in some of my past posts is that sometimes the best lessons are not those that induce sweeping reform or dramatic differences in outlook on how we do things. Major changes are rarely sustainable over time. It is instead those lessons that result in small, balanced tweaks to our behavior that can truly have the most impact over time. Don’t agree with me? Take a deep breath, wait, and then decide.
By Chip Workman
cworkman@taaginc.com
The biggest regret we face from the recent downturn is failing to learn anything as it passes. That is not to say we can avoid another downturn, as surely another bout of greed will come along and create another bubble that will subsequently burst, but perhaps we can at least take away a few ideas that might generate some smarter investment decisions down the road.
A footnote to an article by Dayana Yochim for Yahoo! Finance this month mentions that she regulates herself with a three-day waiting period before making any major money decision. Long a means of gun control and a common rule to waiting to call for a second date, there is no doubt this cooling off period could also be a great tool in governing personal finance on several fronts.
The first is making knee jerk reactions in our portfolios. So many stories are starting to be told about those who finally reached their boiling points right as the market seems to have hit its trough back in March and sold a significant chunk of their equities at the lowest of their lows. While three days might not have saved everyone, certainly taking a breather and realizing this downturn’s place among a lifetime of investing ups and downs might have provided some additional reflection, and an opportunity to avoid selling out right before a historic upswing.
This helps on the upside as well. Greed is a powerful force in convincing investors to stay overweight or even buy more of a certain asset class when things are soaring and can’t possibly go down. If instead, that investor takes a few days to really think about times such as these, they might instead decide to take the respectable profits they have already achieved and buy into that lesser producing asset classes that, while not exciting anyone at the moment, are sure to impress down the road and keep the investor true to their original plan.
Lastly, just think what this waiting period could do for budgets. My wife and I were joking over the weekend that it seems all too easy for a quick trip to Costco for some paper towels and baby wipes to turn into a several hundred dollar shopping spree. By picking a certain dollar amount above which you will wait three days before making the final decision to buy, think of how many wasted purchases could be avoided.
A running theme in some of my past posts is that sometimes the best lessons are not those that induce sweeping reform or dramatic differences in outlook on how we do things. Major changes are rarely sustainable over time. It is instead those lessons that result in small, balanced tweaks to our behavior that can truly have the most impact over time. Don’t agree with me? Take a deep breath, wait, and then decide.
By Chip Workman
cworkman@taaginc.com
Subscribe to:
Posts (Atom)
Posts
