A Financially Perfect 2023?

The week after Christmas is a strange hodge-podge of activity, isn’t it? We head for home, take down holiday decorations, and return gifts.

We worry about how much we overspent…and resolve to “do better” in the coming year. 

I’m convinced the week after Christmas is the perfect time to review the year that’s been…and look ahead to the year that’s looming. It’s an opportunity to do some smart financial planning.

What are the benefits of scheduling an appointment with a respected financial planner and creating a wise financial plan that includes smart strategies for saving, eliminating debt, and investing?  

A big one is that once that plan is in effect, you don’t have to sit around fretting about your money all the time. You can go “off duty” and leave it to your advisor to keep you on track.

But a lot of people choose to tackle this on their own. They stay up late googling and reading. Typically, these DIY-ers focus on questions like:

  • What’s the BEST performing mutual fund (last year, of course)?
  • What company has the LOWEST expenses?
  • What stock will pay me the HIGHEST dividend?
  • What’s the next BIG investment trend?

In short, these DIY-ers want a “perfect” plan. And oftentimes, they don’t end up doing anything until they feel like they’ve found it.

But consider…would having a “good” mutual fund instead of the “best” mutual fund really make that big a difference in your life? 

Before you answer that, let me throw another question your way: What if something happens to thwart your perfect plan?

I see that furrowed brow. You weren’t even considering the thought that something might go wrong, were you? In your mind, you had your perfect mutual fund growing to the sky in 2023. 

In the ideal world of our daydreams, everything always goes as planned. Nothing unexpected or bad ever happens. 

But we don’t live in an ideal world, do we? If we learned nothing else in 2022, we learned that truth!

The “imperfect” happens routinely. Taxes, inflation, and interest rates rise. Laws change in ways we don’t like. Markets fluctuate wildly. Those are actualities. 

Then there are all of life’s very real possibilities: lawsuits, layoffs, accidents, illnesses, death.

I always think it’s tragic when someone preoccupied with the illusion of perfection, gets blindsided by one of those real-life risks that happen to people every day.

That’s why a smart financial strategy is first about preparation and protection, and only afterwards about the pursuit of perfection. Putting together a collection of mutual funds and calling it a portfolio is not a financial plan. Left by itself, it is a gamble that the lottery of life will be kind to you.

Try this thought experiment. You get to choose one of two paths. Path 1 offers you the possibility of one day having $2,000,000. But that same path also leaves you completely unprepared and unprotected against life’s unexpected events. And, if one of those things happened—poof—there goes your $2 million.

Path 2 will one day leave you with $1.8 million. But all along the way, you are both prepared for adverse changes and protected against adverse risks. In other words, you are likely to get the $1,800,000 no matter what happens. And the $1.8 million is enough.

Which would you choose—perfection with high risk, or enough with more safety?

I suppose some folks might choose the first path. But the vast majority, when faced with this choice, will see the second path as the wiser option. 

Perfection is a mirage. Preparation is the smart choice. 

Remember that as you welcome 2023.

To help you think through such issues in greater detail, I’ve created a comprehensive checklist of pre-retirement questions for people who are 60-something. It’s free if you’d like a copy. Email me at bmoore@argentadvisors.com, and I’ll send it to you right away.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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