Monday, February 23, 2009

Does Money Provide TRUE Happiness?

I am a believer in a concept pioneered by Lee Brower of Empowered Wealth, LC called “True Wealth.” Lee teaches that there are 3 fascinating but little known facts:

  1. In life, there’s “True Wealth” and “False Wealth”

  2. False Wealth is seductive but has no real or lasting power.

  3. True Wealth is one of the greatest powers on earth when harnessed and employed correctly.

Having said that let me share with you what separates our firm from the rest of the industry. We understand that, tactical financial strategies in themselves; will not provide overall happiness for clients. We believe that financial assets make up only 25 percent of one’s TOTAL assets. AND, they are NOT the most important asset. YES! I just said your money and things are not your most important assets.

The Bigger Picture


How would you answer this question? What are the most important assets that you posses?

The overwhelming majority of folks answer by saying “my husband, wife, kids, family, and health.” They do not answer - my house, car, stocks or bonds.

In fact, most people when faced with the choice would give up their financial assets for their families and health. I believe it’s because they know that, they can regain all the material possessions if they have strong relationships and good health. On the other hand, the reverse is NOT true.

Here are the other three categories:

  • Human - (family, health, values),
  • Intellectual - (experiences, knowledge, reputation)
  • Contribution - (charities, foundations, taxes)

True Wealth Encompasses ALL Assets NOT just Money:

Our firm believes that financial planning should be a holistic approach. We, therefore, teach our clients to ‘pull’ from these four categories in order to enjoy a more balanced, fulfilling life.

People, who ignore their health and just focus on building wealth, usually end up later in life spending all that wealth trying to re-gain their health.

How about those who ignore ethical behavior in their quest to amass wealth? (And some build tremendous amounts of wealth and popularity). Later on, they usually lose everything in a split second - when they get exposed. (Have you followed the news lately?)

There are some who just focus on their money and ignore building strong family relationships. They usually end up regretting it when it is too late. Most people agree that money cannot and should not replace relationships, families, values and health.

We should all Live, Learn, Give and then Earn in order to realize true fulfillment. This in my opinion is the only means by which we can achieve clarity, balance, focus, true wealth and happiness. GOOD LUCK!

Monday, February 16, 2009

Emotional Financial Decisions Invite Trouble

Experts recommend that we avoid shopping without a list. The reason? Our emotions take over and we shop on impulse. The result? We are likely to return with a bunch of stuff we did not really need.

Do you remember those instances you reacted based on your emotions and either regretted or wished you had handled the situation differently? And I bet that was after you calmed down. I’m pretty sure those of you with kids and/or spouses can easily identify with this (of course, it’s a joke). The point I’m trying to make is this: whenever emotions go up, intelligence moves in the opposite direction (down).

Far too often, I witness people making financial decisions solely based on their emotions. Did you know that is one of the surest ways to end up with some form of financial disaster?

The Crystal Ball

Some get their financial advice from sources like news reporters, experts on TV and radio, magazines, friends, and co-workers (hope I didn’t omit anyone). I’m referring to the kind of advice that “show” where or what you should invest in. I must admit that they usually sound very convincing. In addition, they possess the unique ability of making you feel that all of your financial woes will vanish by following those three-minute segments or reading that article (just for the record, I’m not against reading).
May I humbly submit to you that, although, these recommendations (or tips) seem to be directed at EVERYbody, they are not intended for any specific individual. In other words – they are not for you.
Numerous well-intentioned people who come to me are using long-term investment vehicles for short-range goals; and vice versa. They have money earmarked for their retirement and/or kids college held in CD’s (not the one for music, the one you get at the bank or credit union), and money markets. Some have money they intend to use for emergencies invested in individual stocks, mutual funds and annuities. They usually trace their choices back to a news flash, one of those “experts” they saw on TV, or a “divine” article they read (which took over their emotions).
They End Up Not Too Good

I cannot count how many people I have consulted with over the years who needed to withdraw money (to take care of an emergency), and ended up having to pay unnecessary fees and penalties - Usually because they used put-and-keep accounts instead of put-and-take accounts.

On the other hand, there are those who used put-and-take accounts which usually earn low interest (as one would expect) for their put-and-keep money and are very frustrated after several years that “the money isn’t growing” – yeah right, growing!

That’s not all, there are those emotion-based investors who buy a “hot” stock or an “amazing” mutual fund and by the next show, week, or month (depending on how often the show airs or magazine/column publishes) are being shown an entirely different and “more powerful” stock, strategy, or whatever.

This is the dilemma I find REALLY astonishing: I hear “experts” who advised people to invest directly in the stock market; now telling the very same people, to move their already depressed portfolios OUT, and into money markets, bonds or CDs (and make the losses permanent, I might add). Boy, your emotions can really take you on wild rides if you allow them into your financial affairs.

In short, this is what I’m saying:
It takes more than emotions to be financially prudent and successful. So, we need to keep our emotions out; and start making decisions based on facts, reality and common-sense. Then and only then can we avoid getting financially hurt, over and over again.

Monday, February 9, 2009

Who’s responsible for the housing crisis?

Just tune into talk radio, turn on your TV, or pick up a newspaper and you’ll likely hear and/or read the following statement regarding the current economic crisis:

Wall Street is unethical! “They” got people to sign up for bad mortgages, which led to defaults and foreclosures. Now look: "They" have caused a recession.

My personal experience

I remember vividly – as if it were yesterday – telling folks that based on their financial information, I believed they could not and should not proceed with purchasing a house, OR they might have to purchase one in a lower price range.
In almost every case, with help from their real estate agents, they had already picked out “the house” and received what I call the “how awesome your life will be by purchasing NOW!” lecture. (I trust you may be familiar with this.)

This is the way things usually unfolded: I would receive a phone call a few days later informing me that my recommendations were totally WRONG, according to their real estate agents, who always had comrades called mortgage consultants (another name for loan officers).

As a matter of fact, in all of such instances, these folks had already been “approved.” APPROVED? I remember a few times being called a liar who didn't know much about mortgages – seriously. There were also instances when agents and/or loan officers (or, more appropriately, "mortgage consultants") explained it this way: Our firm did not have “good loan programs.” Of course, the companies they worked for did.
The truth is that we simply choose integrity over commission checks (I thought tha was how it should always be in business, but maybe I’m missing something?).
How It Was Done
  • These borrowers' incomes were misrepresented on the applications, or they took out “no doc” loans (meaning they didn't have to meet any income verification standards)
  • To get these folks in the door, the mortgage companies used lower (teaser) rates that were scheduled to increase in a few years – with the explanation (by the agents and consultants) that once they got in, they would be able to refinance at lower FIXED rates. (Sounds wonderful, doesn't it?)

What Really Happened?

I am sorry, but misrepresenting someone’s income (knowingly or unknowingly) does not change their income in reality.

So what happened was that folks started missing payments within the first few months of buying the WRONG house, which in turn hurt their credit ratings. Then, when it came time to refinance, they were asked to provide proof of income. And guess what? They did not qualify for a reduced rate. Remember how they got in originally?

In desperation, they tried to sell and get out. You see, whenever there are too many homes with “For Sale” signs, and fewer people willing or able to buy those homes, real estate values plummet.

Meanwhile, since the sugar-coated "refinance to a LOW FIXED rate" strategy did not work out, many people saw their mortgage payments go through the roof (should it be a surprise?), which led to even more defaults, foreclosures and on, and on, and on.

The next time you hear one of those “experts” on TV say that the housing crisis was caused by excess inventory build-up, they are trying to say what I just explained in “expert language.”

So Who’s Fault Was It?

  • The bank (Wall Street) that created the exotic loan program (to boost profits)
  • The real estate agent who led people to buy the biggest house based on emotion instead of income (to receive fat commission checks)
  • The loan officer or mortgage consultant who misstated the buyers' income and ignored affordability (to rake in big bucks)
  • The folks who went along and actually signed up for the commitment (based on pure speculation)

Monday, February 2, 2009

Conventional Financial Planning is WRONG!

Or I guess, I should have said in my opinion before making that statement. That is how passionate I feel about the manner in which so-called financial “experts” have managed to convince the vast majority of the American public (and I can safely say about 95 percent) to believe myths. The end result - people are literally gambling their hard earned dollars on porous, revolving door financial advice.

Have you ever wondered: how come only about 5 percent of people are financially independent? And don’t you find it interesting that, this is the group (I mean those you call wealthy or like I often hear folks quip, “lucky”), that do NOT follow the conventional crowd?

When it comes to the majority on the other hand, everyone seems to be following everyone yet, no one knows who is following whom. You may be a bit confused by that statement – here is what I mean: One of the questions I ask new clients as they begin their consultations with our firm is - why they made or are making the financial planning choices they are currently pursuing? The answer is almost always the same – something like: Isn’t that what everybody else is doing? I thought that was the right thing to do.



I can safely say that, majority of Americans make their financial choices by simply just following the crowd – as if all the dogs barking up the wrong tree will somehow make it the right one (of course, it’s just a saying although, someone called me a dog at the coffee shop the other day- and it was supposed to be a compliment).

There are so many angles I can take this discussion, but let me put it this way – if you have been following the majority (conventional advice) either by watching TV, reading magazines (those that show you “hot” picks and strategies), or listening to a typical financial adviser, chances are you have been following myth-based advice. And oh, if these so-called “experts” were right, why isn’t “everyone” financially set (at least for retirement or on track to achieve that)? - Let me leave it here for now.

Over the next several weeks, I will be discussing specific items that will “shock” you (I borrowed that from a client) – I am not claiming to be the messiah - so it’s okay to be skeptical. If you are like the average person I meet, you are pretty smart and desire to be financially comfortable (at least), if not wealthy. You will discover that to be financially healthy you need CLARITY, FACTS, and LOTS OF COMMON-SENSE - that is exactly what we offer - well you’ll be the judge.

So, what do you think?