What do you want your investments to do for you and are they on track to do it?

• So if my investments are doing good, that means they're on track to having the fuel that I need to get me to the goal that I'm trying to reach. (05:47)
• This is why I say investments are far less important in the grand scheme of things than planning. The planning is what gives you clarity, and the planning is what makes things possible. (06:18)
• So if you don't have the desire or the ability to properly compare and evaluate your different funds, then you need to in my strong opinion either A) hire an advisor who knows how to do this for you, or B) use an allocation fund that has a manager who can make sure you aren't overly concentrated in any one area. (08:18)

Quote for the episode: "Goal statements: I now understand what I want my investments to do, and how I should be evaluating if they are doing that. I want my investments to get me to a goal. So are they on a path to do that? And are they doing so effectively when I compare them to their peers?" (08:45)

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Welcome to the Enjoy More 30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, and welcome to the next series here on the

Enjoy More 30s Family Finance podcast. As I said, at the end

of the last season investments aren't my favorite thing to talk

about, surprisingly enough coming from a financial advisor.

But sometimes I think that I may be kind of the only one out

there. So investments are what people have the most questions

about. Investments or what people you don't make movies

about but the mentalities that go with that the 'make it big'

mindset, from what I have seen more often hinders the way

people are able to operate and way they go, then then how it

helps. So why I'm doing this series is because I want to help

you reframe how you view how you utilize your investment. So it

can be done in hopefully, a more constructive way and hence, this

series is called Raising Your Investment Mindset.

As always, if you like what you're hearing, please make sure

to subscribe or follow us on Apple podcasts or really

wherever you listen to. Clicking that star, leaving the review,

it really really does help us reach literally millions of

other young families out there that are just like you. Now if

you want to hear a focus on finances that are related more

to your general mindset, maybe to your parent's mindset, or

even helping your kids with their own money mindset growing

up, please make sure to check out some of our past seasons

that dive deep into those areas. We started this year off even

with a New Year's focus mindset, getting right in the right

direction in the new year. So definitely check those out if

you have not already.

This series, though, like I said is about raising your investment

mindset. How you approach investments as a tool to help

you reach your goals. So just like a podcast entitled Raising

Your Healthy Mindset would focus on a holistic view vs giving you

just you know, five minute crash diet tips. This series isn't

about stock picking or the next best crypto asset. It's about

giving you the opportunity to better understand investments

and their place in your overall plan, the opportunity to not

perhaps be afraid of investments, because they are

some unknown that you were really never taught about in

school. The opportunity really to potentially avoid some of

those pitfalls that we've seen many people out there making.

Today, we are starting off with Investments Don't Do Good. This

is one of my biggest pet peeves. So I will apologize in advance

if you are listening and find me up on the soapbox. So maybe it

is just guys. But I so often hear people say, you know that

dude does really good, alluding to maybe the amount of money

that individual makes or something. But have you ever

just stopped and wondered what the heck that even means? Is

there some scale that I'm not aware of out there where you

pass above a certain threshold in the sky, and now you're in

the 'doing good' camp? The truth is that whoever is likely

whispering this into your ear is saying so because they either A)

see this person buying a lot of stuff and so they're just

assuming they have plenty of money or B) they somehow found

out how much this person happens to earn and to them, that sounds

like a lot. Either way that person is doing their own

internal judgment type comparisons to arrive at that

conclusion.

To take this even a step further, think about if someone

you know is driving across the country. You say to their

parents, "Hey, how is Beth doing on her cross country trip?" If

her parents say "she's doing good", you basically know well,

well, nothing, right? You probably assume she's alive. But

is she doing good because she seen a lot of cool stuff? Is she

making really good time across country? Is she just driving,

you know, really economically from a fuel perspective? How is

she doing good? And when it comes to your investments, I

want you to think about and be able to better determine what

'doing good' means to you, and how to therefore then better

evaluate it. The goal then for today's episode, so the 'if you

can say this at the end of the episode, then you have

succeeded' statement is "I now understand what I want my

investments to do and how I should be evaluating if they're

doing that." So again, "I now understand what I want my

investments to do and how I should be evaluating if they are

doing that." As you could probably tell we often get

people saying that their investments are doing good. This

like other scenarios really means almost nothing other than

the person is currently arbitrarily satisfied with the

performance investments. Again, as we've talked about on many of

these different episodes are the tools that we're using to help

us reach new goals. They are the fuel, but just like launching a

spaceship, the fuel isn't the goal. If the goal isn't to just

have a lot of fuel. The destination, space in this case,

is the goal. So we need to adjust our thinking, first of

doing good from some performance number on a piece of paper that

makes us feel good or bad, because that's really just

saying that we now have more or less fuel than we have before.

But do we have enough fuel? Do we have the right fuel? Doing

good therefore should mean on track to have the fuel we need

to get us to our goal, that destination. So if my

investments are doing good, that means they're on track to having

the fuel that I need to get me to the goal that I'm trying to

reach.

If you earn 15% a year, let's say on your investments, which

is a completely unreasonable expectation long term, by the

way, for anybody out there listening, but you are not going

to be able to meet your goal, then who really cares, right? I

mean, great, I have more fuel for my rocket, but I still can't

make it to outerspace. I'm going to blow up in the atmosphere,

still really not that useful. This is why I say investments

are far less important in the grand scheme of things than

planning. The planning is what gives you clarity, and the

planning is what makes things possible. So Joe, are you saying

I should just ignore my investment performance

altogether? No, I am not saying that. But if you're going to

dive into the performance, you need to do it properly. Properly

means comparing it to its peers. If you told someone about your

investments, it should be number one, they are or are not, excuse

me, they are or are not keeping me on a path to reach my goals.

And two, they are or are not doing well compared to their

peers. Again, they just can't do good on their own compared to

nothing.

Sometimes when someone has an existing investment, they say it

is doing good. And what this oftentimes translates into is

the area their fund is focused in may have done particularly

well. Let's say your account went up 30% in 2021. You would

say, "Hey, this is the best fund ever, I'm never going to sell

it." However, let's say that when we looked at your account,

all you owned was a real estate fund. While the real estate

category index actually went up over 45%, 45%, in 2021. So your

fund in reality did quite poorly. We compared it to its

peers, what other funds like it should have done and your fund

in this example, missed the mark by 15%. And this is true, by the

way regarding the real estate category index this last year.

It is also important to note that the year before that in

2020, it went down over 11%, just to illustrate how it like

most every category should be a piece of a portfolio and not

representing the entire thing.

The point though, is a huge trap we see so many people fall into.

So if you don't have the desire or the ability to properly

compare and evaluate your different funds, then you need

to in my strong opinion either A) hire an advisor who knows how

to do this for you, or B) use an allocation fund that has a

manager who can make sure you aren't overly concentrated in

any one area. So as we get to the end of this episode here,

let's circle back to the goal statement that we said at the

beginning. That statement was "I now understand what I want my

investments to do, and how I should be evaluating if they are

doing that. I want my investments to get me to a goal.

So are they on a path to do that? And are they doing so

effectively when I compare them to their peers?"

So thanks for tuning in today. Join us next week for the

episode called Buy High Sell Low. We're going to talk about

how overall everyone knows buying low and selling high

makes sense, but why so many people wind up doing the exact

opposite.

Overall, if you're able to implement what we covered today,

fantastic as always, less to worry about and more focus on

just going out there and enjoying life. If you're wanting

help with these things, though, if you have questions you need

help in clarifying, you can either head on head on over to

the ASK JOE section on the show's website. EnjoyMore30s,

that's 30s.com. You can also connect with me directly by

visiting my wealth management firm's site New Horizons Wealth

Management at nhwmllc.com. Until next week, thanks for joining me

today and I look forward to connecting with you again soon.

The conversations on this show are

Joe's opinions that are provided for general information purposes

only. They do not constitute accounting, legal, tax, or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer, or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

Registered Investment Advisor, Member FINRA/SIPC.