I thought I’d use one of the sketches by Carl Richards from his latest book, The One Page Financial Plan, which I’m currently reviewing – so far it’s excellent.
The illustration is making the point that the best financial plan has nothing to do with what the markets are doing, what the politicians are saying, or the hot share tip from the guy at the golf club – it’s all about what is most important to you.
We’ve all made financial mistakes, as we’re all human and being human means we’re sometimes prone to irrationality. Bad decisions about money are not failures; rather what happens when emotional creatures make decisions about the future with limited information. They are things we learn from and something we can indeed plan for.
When we develop a financial plan, we cannot expect perfection. However, we can make informed decisions and adjust them over the years. We are going to make the best decisions we possibly can based on academic and trusted research, but we cannot obsess over getting these exactly right. There is no magic formula and research shows us that we will very rarely find the next hot share investment sector or fund.
Therefore, we collaborate with you to determine what is most important to you, what does money mean to you, and then we put a structured plan together to meet your aspirations. In other words, you become the central focus of the plan, and not the fund manager.