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How do you measure investing success? Rollover your 401K, then what? How do you invest for long term growth? Think you can't get a brokerage's attention because you don't have enough to invest? You're probably right. Think you can't trust your brokerage because they're the ones benefiting from the products they sell you? Also right. A friend once asked me about this, asked "if this works, why doesn't everyone do it?". Well, the brokerages you get advice from don't make any money when investing this way. Why would they teach you something that earns them less money? Good point. Caution! Reading this brief Financial Fable may cause you to ask uncomfortable questions about your retirement future. You have been warned. ;-) If you like this, please share it.
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A Crack in the MatrixA FINANCIAL FABLE
Tuesday, July 9, 13
The Leaning Tower of Pisa is leaning further
each yearOh my!
Tuesday, July 9, 13
Proof
Tuesday, July 9, 13
Wait!
Tuesday, July 9, 13
It’s Just an Illusion
Whew.
Tuesday, July 9, 13
It’s an artifact of the way our eyes are designed
You were looking at two copies of the same image
Tuesday, July 9, 13
Try it Yourself
Download the image, duplicate it, open both & place them side-by-side
Tuesday, July 9, 13
Often when things “make sense” we don’t ask deep
probing questions
Tuesday, July 9, 13
We Should
Yes, even when things make sense
Tuesday, July 9, 13
Lets Try This Again
Tuesday, July 9, 13
Your investing success is measured by how large
your portfolio has grown
Tuesday, July 9, 13
Brokerage statements focus on cost, total value,
and gain or loss with a passing mention of
income
ProofTuesday, July 9, 13
Tuesday, July 9, 13
Even when you invest for income, your statement
focuses on portfolio value
Tuesday, July 9, 13
Fixed Income is 99% of the portfolio...
Tuesday, July 9, 13
Fixed Income is 99% of the portfolio...
Why is “valuation” focused on “account value”?
Tuesday, July 9, 13
It’s Just Another Illusion
Tuesday, July 9, 13
Dividend Reinvesting
Instead of taking a dividend payment in cash today, you reinvest your dividend into the
company in order to get a larger future payout
A well known way of long-term investing for ‘regular people’
Tuesday, July 9, 13
Dividend ReinvestingHow it looks on your brokerage statement
Tuesday, July 9, 13
One Reinvestment...
Why is it 2 Transactions?
Tuesday, July 9, 13
Taxes due this year
Tax basis for the future
Tuesday, July 9, 13
It’s an artifact of the way financial institutions are
designed
To ensure IRS (tax) compliance & reporting
Tuesday, July 9, 13
Why judge the success of your investments by how
much tax you owe...
Tuesday, July 9, 13
... Especially when you’re investing in a tax deferred retirement account (IRA)?!
Duh!
Tuesday, July 9, 13
Brokerage statements don’t serve the customer
They serve the IRS
Tuesday, July 9, 13
Can we do better*?
* Do better, but please also pay your taxes!
Tuesday, July 9, 13
Can meaningful measurements be used to
motivate healthy investing habits?
Tuesday, July 9, 13
Can meaningful measurements be used to
make investing fun?
You’re one of those people too afraid to open their monthly statements, aren’t you?
Tuesday, July 9, 13
Fear.Is Not.
Fun.
Tuesday, July 9, 13
Measure what matters.
Let go of the fear. Be empowered. Find out more.
Tuesday, July 9, 13
Try our absolutely free 10-part email course and
learn how to put your Elephant to work
Not quite convinced? Learn more.
Tuesday, July 9, 13
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