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Emotion Work; Part 2 February 17, 2009

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In my last post I suggested that part of managing one’s emotions is to have a plan.  That certainly is a requirement.  But say you have a plan, what makes you stick to it?  Especially when your friends and neighbors are constantly telling you how bad things are, or if you get laid off a job, or if you run into problems with your investments, your having a hard time finding a renter for you rental property or your stocks has taken a dive?

Well (shameless plug here), a good plan, like what we do at the Shafer Wealth Academy, has inherent risk management loaded into the plan; like a sominex account or money market reserves set at a certain comfort level or highly liquid stock investments, all of which are there to help you through the hard times.  Now I know from personal experience that even with ample reserves there are going to be times you are tested.  But that is life, right.  No one gets out of here not being tested at some point in some way.

So, in every plan risk management should be inherent to the plan.  And if you came to the Shafer Wealth Academy you would have a wealth coach at your disposal which is the second part.  Master mind groups are as old as wealth creation.  But, not every one has the ability to put together a master mind group for every part of their life.  So having someone you can contact when you have questions or are being challenged emotionally is of critical importance.  So the second critical issue is having others that can help you through the challenging parts.  Oh, and the others should not be folks who are selling a particular financial products to you, like insurance or mutual fund or stock or financial planning sales people.  These  folks will almost always default to selling you whatever product they have to offer using your fear or confusion against you.

Finally, there is a third part of emotion work that really works for me.  That is the need to be self reliant even into retirement.  If you don’t have this drive, then you need to find it somewhere because to be reliant on the government or your children or friends during your retirement years is to be totally helpless at times.  You need to use that feeling of not wanting to be helpless or at least wanting to be self-reliant as long as possible to drive you.

If you have any doubt that is where you are headed download my e-book and read the facts about how over 90% of current folks are, and in the near future are going to be even more so, dependent upon the government.

So in review there are four areas of emotion work needed to be accomplished:

1.  Allow the thought that you could use some help seep into your system and act on that thought by working with someone that can build a real wealth building plan;

2. Make sure the person helping you with your plan builds into it comfortable risk management procedures.  Comfortable to you; and

3.  Have a mentor or wealth coach that you can communicate with when you have questions or get emotionally upset with what is going on with your finances or investments; and

4. Keep your eye on the prize, which should be financial independence throughout your retirement.

If you accomplish these four things, then you are well on your way to success by managing your emotions!

Why Financial Experts Don’t Work August 5, 2008

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The hardest thing for some folks to understand is why taking advice from or turning your money over to experts doesn’t work.  After all, that is what we have been trained to do, listen to experts! There are two problems with this strategy.

First, is the problem of our own emotional/mental structures.  Taking advice from experts doesn’t change our own mental structures.  If we don’t change the way we think about money, if we don’t change our understanding about money, if we don’t create a wealth creating environment in our lives, then we will fail to create wealth.  It is as simple as that.  By going to a “financial expert” we are demonstrating an unwillingness to take control of our own lives and that is what needs to be done in order to create wealth.  Study after study demonstrates this. We can not outsource control and expect to have above average results.

Secondly, the masses of “financial experts” out there are mostly folks just like you, that haven’t taken control of their own finances, or turn themselves into active participants in their own financial lives.  What, you say?  Yes, that’s right how many folks in the financial expert category are actually wealthy?  How many have made their wealth through investing?  Most, if they have acquired any wealth, do it by having superior sales abilities that turns into superior income.  But as a class, they are wealth underachievers, meaning they have less wealth given their income, than the average.  I read that the average “financial expert” has an income of $80,000, in which they aren’t very good, at least below average, at turning into wealth.

If you want to create wealth you have to create the mental environment in which wealth creation can prosper.  If you want to create wealth you need to learn to do it yourself.  If you want to create wealth you can do it faster, more efficiently with a wealth coach from the Shafer Wealth Academy www.shaferwealthacademy.com.  The alternative is to make no changes, which will get you where? 

Ernst and Young Study; Most will run out of money! July 15, 2008

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The evidence has been coming in for more than a decade, but the mainstream institutions are just now picking up on it.  Regular readers recognize it as a common theme.  Here is a direct quote from the study:

“…Americans will have to drastically reduce their standard of living before retirement to live comfortably, or avoid destitution, later in life.” [bold by author]

The study goes on to pronounce that middle income workers have to reduce their spending 24% now in order reduce their chances of becoming destitute during retirement, these same middle income workers if within 7 years of retirement must reduce their spending 37%!  And it gets worse from there.  Workers with $75,000 income/year if they have other income aside from social security have a 37% chance of running out of money.  This the the heart of the middle class that has developed other retirement income (a minority) and they have a better than 1/3 chance of running out of money!

Of course as accountants they suggest reducing your standard of living, but this is the first time I have seen anyone put a percentage figure on the reduction.  So are you ready to reduce your standard of living  by 24%?

If you have already belt tightened to you are unable to breath what do you do next?

Well here is just a tiny suggestion, call me!  727.804.9271.  I have been helping people escape from this financial vise grip not by creating miracles, but by showing them how wealth is created, built and maintained and how they can do the same!  Check out my web site   www.shaferwealthacademy.com fill in the contact form and get started today. before it is to late.

Wall Street Patsy; Part II July 10, 2008

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Let me ask you a question?  If you had to recommend someplace to put someones money, and your choices were an investment that data demonstrated the average person got a return of less than 5%, and the best you could hope for was around 8% or the other choice was an investment that has returned 21% over the last 43 years and 18% over the last 10 years, which would you advise?

Now, let’s add in the final point.  The first investment meant you could make a good living and the second meant you would not make a living advising.  Which would you advise now?

There you have the essentials of the investment game.  Advise mutual funds and make a living or advise Berkshire Hathaway and be out of the business.  So is anyone surprised that advisors push the mutual funds over the proven better performer?  Is anyone surprised that Wall Street devises all sorts of propaganda to convince folks of the prudence of mutual fund investing?  I mean in what world can a financial advisor suggests an inferior investment with higher risk to folks who NEED maximum return to have a shot at a decent retirement?

When I talk to groups I ask folks to raise their hand if they own mutual funds.  Then I ask them to raise their hand if they own Berkshire Hathaway.  Do you know the results?  I bet you do, few raise there hands on the second question and most raise their hands on the first. 

So the question to you, who is Wall Street’s Patsy?  Who has gotten solid financial advice? Who has gotten advice that enriches the advisor and their bosses at the cost of the consumer?  I understand speculation, but how do you bet your retirement on a proven loser, when there is a proven winner out there?

Ready to leave the herd yet?


Active V. Passive Investors June 10, 2008

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Two weeks ago I blogged on mutual funds and last week it was on EIUL’s.  This post is about consumer behavior.

Of all the propaganda that comes from Wall Street, probably the most insidious is the suggestion that one can be an automatic/passive investor.  Just throw some money on a regular basis at a mutual fund and all will be well, financial advisors scream.  Leave the investing to the “pro’s,” you just need to trust them to do the job they are so well paid to do.  You don’t need to learn anything about stock investing, I will manage your money, just trust me!  Poppycock!

Study after study proves the opposite.  Professional money managers as a group underperform the market every year.  The majority of mutual funds underperform the market every year.  Those that out perform the market for a while, underperform the market over the next period of time.

So they tell you to invest in index funds designed to mimic a stock index.  Although these index funds do better than actively managed funds, they still have both significant expenses and tax consequences.  Recently Wall Street has been talking about investor psychology, blaming poor consumer behavior for the poor performance of most people’s portfolio’s.  But here is the kicker, even when people turn their money over to financial planners and/or investment managers they do badly.  In fact there is some research out there that suggest that the do-it-yourselfers do better than the folks who turn to professional help.

So what is a person to do?  First, you better take control of your investments/retirement planning yourself. Secondly, you should turn off all the unsolicited investment advice coming at you from the mass media whether it is a 24 hour cable network, magazine, info-commercial, or other outlet.  Third, take the time to turn yourself into an expert.  Finally, separate from herd.

Consider this a tall order?  Well, it is.  Mainly, because it takes tremendous will power to re-program our brains to think outside the box.  Then after you re-train your brain you must spend considerable time researching wealth creation.  Finally, you must change your understanding of and reaction to risk.

I know all this because I had to accomplish all of it myself.  I had to take a real good look at my investments and my wealth creation.  A strong dose of reality that was!  Once I realized what I was doing wasn’t working, then I had to spend much time researching why, and what works for other folks.  Finally, I had to find the courage to do something different than what every financial expert and my friends and parents all had told me was the way to go.  It was a very painful and time consuming experience.  Every grain in my body rebelled along the way until finally the results were obvious.

The road is long and painful for folks breaking away from the herd unless they find a mentor.  That is why I created the Shafer Wealth Academy (www.shaferwealthacademy.com).  It is designed to bring people through the process; emotionally, psychologically, and intelligently.   I have a suggestion for folks.  Take a real hard look at your wealth creation.  And if you find it wanting, come to me.  It will cost you a little bit, but think about what the alternative will cost you.  Imagine if you fail to create enough wealth to get you through your retirement years.  That will be a bitter pill for many to swallow.  It is avoidable, but you need to become an active investor.  The results are simply to important to be passive about.  The results are to important to depend on some so-called expert.  Make yourself the expert.


Recently, I have talked to several folks who have seen their income curtailed because of the current economic environment.  They stated they wanted to join the academy, but were afraid to take on any more expenses.  I feel for them, I really do.  But it is exactly that attitude, that fear no matter how based in reality it is, that will always keep them from producing real wealth.  If they had a wealth creation plan, a real plan that allows for the bad days as well as the good days, they would be emotionally in a completely different place.  A place that understands abundance not scarcity, a place that engenders courage not fear. My clients can measure how far along their wealth building plan they are and get that good feeling because they are progressing.  Join us!

Is it really simple to get rich? May 6, 2008

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One of the interesting phenomenons in the finance world is the ability of Wall Street to get people to hold two opposing but simultaneous opinions.  Over the years Wall Street has engendered many articles and even books that tell us that it is simple to get rich.  Simply invest monthly into mutual funds and “whala” you are rich.  Of course they supply their sales people with charts and statistics that demonstrate this simple fact to you.  Then with a sleight of hand they take that simple away from you and tell you to get a “professional” to advice you.  So simple you need a stock/mutual fund salesperson to advice you so you stay out of trouble?  So simple that they need to tell you all about their money manager’s pedigree?  So simple that they tell you to get a “check up” annually so changes can be made?  Hmmmm…..is there something in your brain telling you that maybe it isn’t that simple?  Can you look around and see all those folks who became rich because of mutual funds?  Is there any study of rich folks who document their wealth as a result of investing in mutual funds monthly?  

There is an interesting chart in the back of “The Millionaire Next Door,” which documents their study of folks by occupation that are overachievers and underachievers when it comes to building wealth.  In other words, have they built more wealth than expected given their income or less.  Financial Services Professionals come in as less.  Are they not taking their own advice?  Or are they?  Maybe they are spending to much on trying to impress their clients and not enough on investing?  But, the bottom line is if they were so “expert” in investing surely they would do better than the average folks in building wealth, wouldn’t they?

I have documented the results many times before.  I have pointed out the faulty assumptions before.  I have strongly suggested, if you are concerned about your retirement, that you not only take a look at my website www.shaferwealthacademy.com but you fill in the contact information so we can have a discussion about wealth building.  Is your brain telling you it is not so simple as Wall Street has propagandized?  Are you willing to admit that you might need a little help?  Are you going to continue to do what Wall Street wants you to do? Or are you ready to take control of your destiny? Because it really is more complicated than putting a few hundred dollars a month into a mutual fund!