My Personal Financial Odyssey – Investments – Part 6

If you are successful in your career, chances are you will earn more and more income through the years.  And if you are also diligent in tracking your financial well-being, then it is likely you will begin to accumulate wealth in some fashion or another.  Indeed, one of the typical goals of both furthering one’s career and tracking one’s finances properly is to do just that – accumulate wealth.

If you do accumulate wealth through your own efforts or acquire it in some other legal manner, your financial tracking job just got far more complicated, at least if you desire to keep and grow that wealth.  You now have two new jobs that you didn’t have before.  The first job is deciding just where to put that wealth and the second is tracking and evaluating its performance once you do place it.

To many people this process may seem very easy, but I am here to tell you that it is often much more difficult than accumulating the wealth in the first place.  I’m sure all of you have read stories about entertainers and athletes who are bankrupt after having earned millions and millions of dollars in their careers.  The reason this happens is because they failed, often spectacularly, at the jobs of placing and tracking and evaluating the wealth they earned.

In my experience, the biggest reason such spectacular failures happen are through a simple abdication of responsibility.  The responsibility I am talking about is to do the work necessary, on your own, to understand and evaluate both the investments you are making and the people you are entrusting your wealth to.  As much as you may like both the investments you make and the people you are investing with, it is IMPERATIVE to regularly spend enough time, on your own, reviewing and evaluating your investments.  And this process must be done critically.  You can’t take anything for granted.  If something doesn’t seem right or doesn’t make sense to you, you absolutely must ask questions until you do get comfortable about the investment.

The work of finding investments and the people to manage those investments has far more to do with philosophy and ethics than anything related to accounting or finance.  First, you have to understand yourself clearly.  You have to know whether losing 10% or 20% or more of your investment is something you can live with.  And you have to be honest with yourself about how much you know about investments and how much you are willing to learn.  The answers to these questions will determine what kind of investments you are willing to make, and what kind of investment managers you will be willing to employ.

In order to retain your wealth at all, you must develop at least a modicum of knowledge about investments, but if you only want to learn the bare minimum, then that will make the moral evaluation of whoever you do place your investments with all the more important.  If you don’t fully understand the investments, then you absolutely must fully trust the investment manager you hire, and you must continue to keep track of what he is doing regardless of how much you do trust him.

The work of tracking and evaluating investments is in many ways much simpler than the work of finding good investments, and can be done with the help of Quicken.  Quicken gives you the ability to set up just about any investment you can come up with.  It also gives you the ability to download stock and bond transactions and their pricing from most any broker’s website.  This work doesn’t have to be terribly time-consuming but it does have to be done regularly.  And it is extremely important to reconcile the investments you are tracking in Quicken with your brokerage statements monthly.  I also strongly recommend you evaluate your investments at least quarterly, more often if you want to make absolutely sure everything is working as you desire.

If you follow this program I can’t guarantee you will grow your investments because that can often be far more dependent on political and economic conditions than on your investment selection.  But I can guarantee you will be investing according to your own values and goals, and that you will not lose your investments because of fraud or theft.  You will also be giving yourself the best opportunity possible to retain and grow your investments.

And if you are looking for a consultant to help you with finding a good investment manager, training on how to properly track your investments, or someone to actually track your investments for you, I would be happy to assist.

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