Investing Wisely

Running the investor program.

Related: Financed

Whether it's your time or money, how you invest today impacts the results you get tomorrow.

Press start.

You begin by investing in your own understanding of investing.

The Time Value of Money

Calculators available to all of us today reveal the time value of money, which can result in a time/money revolution.

Present Value (PV), Future Value (FV), Interest Rate (I/Y), and number of periods (N). Annuity Payment (PMT) can be included but is not a required element.

These tools will help you appreciate the reward of having an investor mindset, and such, from that appreciation - we begin to draw into ourselves the same.

Take $100 or 100 minutes. Where you invest is all that matters.

The return on investment (ROI) is what we'll need to monitor.

Where (and who) you are today is largely the result of where (or who) you invested in (knowing or unknowingly).

Where are you investing your thoughts?

Are you giving your thoughts to others?

If we let others think for us, when things don't turn out so well, we'll have someone else to blame!

Before we invest in actions, people, or things... a thought begins. Pay mind to your thoughts, for they are the starting point of all action.

What proceeds thought? Belief. Thus, our beliefs have a greater impact on our life than anything else. The problem is we were born into a set of beliefs that were not our own. We live in a simmering pot of conflicting beliefs. It's no wonder there is so much distrust in the world.

We will fight to the death to defend our beliefs. Even when those beliefs are false (most are), even when they are in direct conflict of who we desire to be, we'll have a hard time.

Consider that what comes easy, without conflict, without guilt, without struggle - is in alignment with out beliefs.

Case in point: I could give you a million dollars today. But how you spend (or even if you spend) it will be determined by your beliefs.

Those of us with low self worth will apt to give the money away - to give it to someone 'more deserving.'

Who is more deserving than you? I gave it to you because you deserve it. Whether or not it was money you feel you earned is beside the point. Our opinion or ourselves is all the matters, so make it a good one!

Asking Why challenges beliefs.

We can validate our beliefs by diving into why they exist in the first place.

One core belief I carry, for better or worse, is one of inclusion. I believe that everyone should be included. If the game only accommodates 10 people, but there's 12 in the room, I'd proclaim we change the rules to allow all 12 people to play.

I suspect this belief stems from the fact I am a middle child with 3 brothers. I experienced the same pings of exclusion on the playground that many of you also faced. The difference is how I respond.

How has it served me well?

I have a deep sense of caring for everyone. In my work, this translates to a customer loyalty that has been the root of repeat business and referrals. I think of my clients often, and feel guilty when their needs are not met.

How has this hurt me?

I focus on the negative. Despite all the things that go well, I dwell on what doesn't. When at an event with others, I may feel guilty for those who are not with us. I feel guilty for having more when I see others with less. I'm unable to fully appreciate what I have because I focus on those who don't.

In a perfect world, myself and others would have everything they need. Everyone would be invited and there'd be no exclusion.

In a world of growing exclusion, it's little wonder I'm feeling discouraged by it all.

I recently taught a ukulele class. There was one student who was struggling. She was visibly very upset. Despite everyone else in the room having a good time, all my focus was on this one student. Even weeks later, I am still dwelling on what I could have done differently to give that student a better experience.

So there you have the pros/cons on my 'inclusion for all' belief. I see now that I dwell on the negatives of that belief more than the positives. It's the nature of that belief! That belief really doesn't serve me very well, does it?

Shifting beliefs

In 2008, after a growing disdain with the corporate world, I interviewed 50 entrepreneurs to find out why they had what I wanted and why I didn't.

What I discovered was an entirely different set of beliefs. Employers don't just think differently than employees, they have different beliefs.

It's the gap in beliefs that creates the distrust between employees and employers. The more we defend or differences, the further apart are go.

So what are the core beliefs of successful entrepreneurs?

I distill them down in The seven beliefs of successful entrepreneurs. They are:

What I have learned over the nearly 8 years I've been an entrepreneur myself is the importance of revisiting these beliefs. And not just reciting them, but really diving deep into the why that exists behind each belief.

Consider the value in acquiring this knowledge:

Will you be successful without the beliefs the accompany the success? No. Despite being successful in the eyes of others, you'll never feel successful yourself until you align yourself with proper beliefs.

How do we form beliefs?

Though teachers and experience. Most of them existed before we did. We adopted our parents beliefs. I would even argue the beliefs exist in your DNA.

To answer the age old question "are entrepreneurs born or made?" I've determined the answer is both. They are born with a bit of DNA passed along from an ambition of someone in their family tree. But then the early experiences they have in life (often through a teacher or mentor) deepens a belief that may have only been a seed of what they were born into.

An example: You were born to parents who believed they were economically disadvantaged. And all the circumstances and experiences you have validate that belief. Even when financial opportunities presented themselves to you, you probably won't notice. Likewise, if you are born into parents who believe in economical vitality, essentially an entrepreneur mindset, and your experiences reflect that vitality, you will more easily notice the economic opportunities when they come around.

The world we see reflects the beliefs we have.

We are only limited by the beliefs we are unable to overcome. To become someone else, you must overcome who you've been.

The paper, which outlines Vanguard's core investment beliefs, begins by noting that the overarching theme running through the investment guidance they provide to clients is to "focus on those things within your control." They then note that, unfortunately, too many investors "focus on the markets, the economy, manager ratings, or the performance of an individual security or strategy, overlooking the fundamental principles that we believe can give them the best chance of success." While taking the time to read the full paper would be one of the best "investments" you could make, the following is offered as a short summary of the four major themes covered and the advice offered.


Because a plan should be tailored to your unique situation, the process should begin by outlining your objectives as well as any significant constraints. It should be long-term and designed to endure through bull and bear markets, and be flexible enough to adjust for unexpected events along the way -- what I've referred to as having a Plan B. Once the plan is in place, the investor should evaluate it at regular intervals. They note that "without a plan, investors can be tempted to build a portfolio based on transitory factors such as fund ratings -- something that can amount to a 'buy high, sell low' strategy." They emphasized that "a sound investment plan can help the investor to avoid such behavior, because it demonstrates the purpose and value of asset allocation, diversification and rebalancing. It also helps the investor to stay focused on intended contribution and spending rates."


The investment strategy should emphasize broad global diversification across asset classes and avoid exposure to unnecessary risks. It should also be built upon reasonable expectations for risk and returns. They also emphasize that while stocks are risky, having too low an allocation to them can create other risks, increasing the risk of not achieving your financial and life goals. They also note that while historical returns can provide perspective, it may not be appropriate to simply project past returns into the future. Current bond yields and stock market valuations (price-to-earnings ratios) should be considered to make sure that return expectations are realistic. "The implication is that investors may need to adjust their asset allocation assumptions and contribution/spending plans to meet a future objective that could previously have seemed easily achievable based on historical values alone."


While you can't control the markets or returns, you can control costs and tax efficiency. And the evidence is clear that lower cost, passively managed investments outperform higher cost active alternatives. You should also pay attention to "asset location" with the objective being to hold relatively tax-efficient investments, such as broad-market stock index funds or ETFs, in taxable accounts while keeping tax-inefficient investments, such as taxable bonds and REITs, in retirement accounts.


Both bull and bear markets create emotions that lead to bad investor behavior. They can cause investors "to make impulsive decisions or, conversely, become paralyzed, unable to implement an investment strategy or to rebalance a portfolio as needed. Discipline and perspective are the qualities that can help investors remain committed to their long-term investment programs through periods of market uncertainty." Efforts to time the market rarely pay off, and they can greatly reduce the odds of achieving your goals. Enforcing an asset allocation through periodic rebalancing can help manage a portfolio's risk.

They also importantly note that "increasing the savings rate can have a substantial impact on wealth accumulation. A higher contribution rate can be a more powerful and reliable contributor to wealth accumulation than trying for higher returns by increasing the risk."


Napoleon noted that "Most battles are won or lost [in the preparation stage] long before the first shot is fired." The same is true for investing. Having a well-thought-out, written and signed plan provides you with the armor that can protect you from all the emotions that investing can evoke -- emotions that lead to counterproductive behavior. This is why it's so important to have a long-term perspective and a disciplined approach. Vanguard's advice can be summed up in this statement: "Because the future market return is unknowable and uncontrollable, investors should instead focus on the factors that are within their control -- namely asset allocation and the amount contributed to or spent from the portfolio over time."