Financial Planning, Investing, and Wealth

November 12, 2021

Investing and financial planning which lead to building wealth over the long term. There are so many resources out there that educate the public on best practices to build long-term wealth.

Everyone by now knows about the investment prowess of the Warren Buffet. His success with Berkshire Hathaway is well documented. It has been recently reported that his net worth surpassed $100 Billion. That is an incredible feat by any objective standard in one generation. Let’s assume that you nor I am the next Warren Buffet. However, there are some lessons we can learn from his success. Some best practices, when it comes to investing and building wealth. I’ve enjoyed and spoken about a recent book with my clients by Morgan Housel, The Psychology of Money; I’ve also had the pleasure of hosting a Q&A with Morgan. In the book, he discusses some of the success and cautionary tales when it comes to investing.

Invest like the Oracle of Omaha

For example, when talking about Warren Buffet, people often forget that one of the main factors leading to success is time, as in the market. He has been investing consistently for over 50 years! Identifying reliable companies or investment opportunities and letting time in the market work in his favor. We can not just oversimplify his success and solely attribute it to this one factor, working with clients and advising them on the best ways to achieve their financial goals. I can say unequivocally that using the time to your advantage is easier said than done.

Ok, so What is the most significant risk to your investment success? You! In the financial planning industry, and I’d say investing, overall, Behavioral Finance is becoming a discipline. There are even certifications and advanced training available in this, for example, Financial TherapyLife Planning, to name a few. Behavioral finance is the intersection of money and psychology. Practitioners subscribe to this belief that financial success is primarily due to our different money attitudes, biases, experiences, risk tolerance, etc., over traditional financial analysis measurements. We’ve seen evidence of this recently.

Gamestop Fiasco

A few short months ago, everyone was writing and speaking about the Gamestop fiasco when the stock price experienced an unprecedented surge (and eventual fall) in price within a short time. Many people bought the stock simply because it was “trending” or “heard” about it. Platforms such as Robinhood, TD Ameritrade, Schwab have all lowered the trading costs to $0, making it even easier for the average investor to buy and sell stock. This creates a perfect scenario for people to give in to the worst temptations and treat stock investing like gambling. This wouldn’t be that bad, except many people don’t know they’re gambling and think they’re investing.

Therefore one of the most significant value adds a financial planner can bring to a client relationship is to protect the client from themselves. The competent financial planner can run “interference,” adding an objective sounding board for the client before deciding.

Remember, one of the most significant predictors of investment success is time in the market. Having a sound plan and disciplined strategy will increase your probability of achieving your financial success. So yes, You are the most significant risk to your financial success, but thankfully this one is easily mitigated.

financial planning, wealth, investing

financial planning, wealth, investing

Vantage Pointe Planning, L.L.C. is a registered investment advisor with North Carolina. We are not limited to this state, as we will register with other states when our client count in any particular state meets registration requirements. We will offer individualized responses to persons in a particular state only after complying with that states regulatory requirements, or pursuant to an applicable state de minimis exemption or exclusion. This web site is for educational purposes only and the information contained herein should not be construed as an offer to provide investment advice. The information should not be construed as advice to meet the particular investment needs of any investor. With each financial planning engagement, our ADV Part 2 which includes the Privacy Policy, must be delivered to the Client. These will be emailed to you prior to our Introductory Meeting.