Saturday, December 14, 2013

Financial Saviness

Great article on the mindset it takes to be financially sound. Every single situation is different, and there's no cookie-cutter advice that works for everyone.

With respect to Navy life, I was an idiot for not investing in Thrift Savings Plan (TSP) early in my career. No reason not to, other than stupidity and false excuses about what I needed to spend money on. Once I did start socking away the cheddar, I spent a great deal of time worrying about which funds to invest in, how much to allocate, etc.

Thankfully TSP came around with their lifecycle funds, which do some of the work for you. I have no doubt that I could do better if I managed the funds myself, but at what cost? I have no desire to spend every waking hour looking at tickers, analyzing the market, and given my irrational fears, paying a lot of money to someone to advise me. And feeling taken advantage of when the market tumbles and I followed that advice.

1) You have to have a system that's easy to use: Because if you don't, you'll never follow it.

2) You need to have some built-in boundaries to keep you on track & honest

3) Don't nuke it out: You can do better than Pareto (the 80/20 rule), but don't lose your mind trying to get that last 0.001% gain.

I sleep comfortably knowing our retirement savings are on autopilot (I needn't do anything to deposit the money), and we periodically assess what we're investing in (for ethics and earnings). But I don't worry whether I should have traded yesterday or in two weeks. It's a marathon, not a sprint. The important part is to get started out of the gate, and to keep running!

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