The Magic of Goal Setting
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This podcast is being recorded on sunday before thanksgiving, uh, that thanksgiving two thousand twenty four A I always enjoy the thanksgiving podcast. As IT does give me an opportunity to say a very heart felt, thank you for what you all do for me. I I feel honored to be one of the teachers in your life or advisers or what however you may think of me, IT doesn't matter to me.

And just that blows me away that we have some almost forty five thousand subscribers who read our weekly newsletter. And I I certainly thank them for being there to share with. We have the the folks who read our um our market watch articles, and we do have no idea how many different readers that we have.

But IT wouldn't surprise us to find out certainly that we have had a chance over the years to to to share with millions of of readers. And I also feel the folks that and listen to our podcast who take time out of their life, they go for a walk a whatever the conditions that you may listen to podcast. But to think that somebody listens to these things on a relatively regular basis is very gratifying.

I know that there are a lot of things we could do Better in h serving you. There are podcast and will working this next year to be Better. But thank you for being there. Are also very thankful for the people at western ocean in university who have, in a sense interested their their students.

So with our work and that work is continues to get bigger and bigger in terms of how many students were able to help, I feel honor and and thankful to be able, and i'm sure Chris Peterson feels the same way to to write for the american association of individual investors. I must say they continue to, uh, allow me to speak to their chapters. That is an honor I am.

I'm so thankful to have the ability to attend and speak at the bugle head conference. I'm coming again next year, and i'm thrilled to be able to do IT. I am also so thankful to work with Chris and deal. They are amazing partners. And i've in rich book as well on IT.

Rich has been writing with me for I am must be twenty five, thirty years and what a wonderful relationship that has been and he is is absolutely, as Christian deal, are devoted to a helping the people that were reaching out to end the truth tellers. I am so thankful to have people to send youtube to read and learn more that know a lot more than I do about areas of the financial planning process. And IT is IT is wonderful to be able to recommend in those people without concern for people being taken advantage of in on top of this short list of thankyou than a extending era, I get up between three and four every thanksgiving morning.

I start with a clean piece of paper, and I do IT on the computer, by the way, and a clean page, and I write a list of the people that I am thankful for. Now I would include these groups, but IT will include friends and family in mentors. And IT is IT is takes about two to three hours to go through IT and do IT.

But IT reminds me how many people have been, have been important enough that I think that their friendship, their mentorship, whatever way I look at them, has been, has been helpful to me. I am so thankful for the people who helped me when I was in junior, in high school, in high school, in, and hired me to work for them. I learned so much working for other people that were just phenomenal mentors in the early years of of me learning about business.

So thank you to all of you. And I I also, i've got to say that without your emails, and I would know so little about what IT is you need from us, so those who write to us and tell us, ask us questions, suggest things that we do to help others. Boy, do I appreciate what you have done for us.

And i'm certainly thankful to all the parents who have shared parts of our information with their children and with their their siblings and and and and all the teachers who teach our information to their students. All of that I am very thankful for. And certainly the people who have have sent us money to help support our our foundation.

Certainly, I really I thank you so much for that. Um when I open up an envelope and I get a five or ten dollar uh contribution, I am thankful. And every once in a while, not often, but it's a thousand dollars this last week and one day, one was a thousand dollars and one was two thousand dollars.

And we're not very aggressive in trying to raise money. But I think that this year we probably have had some forty to fifty thousand dollars in in, in contributions. And by the way, since I brought this up, I just want to an a side here and maybe this is not very timely while i'm while i'm taken the time to thank you, but my wife and I have an essence moved three times in the last year.

And we have lived part of the time on bAmberg gisland, part of the time in portland, in part of the time in range mara, in galaxy a and there was so we use the forwarding service from the post office. But I do know that there are situations. We know that there are people who have sent us checks that we have not got and uh and so what what I want a reason to bring this up is not because i'm asking for if you send us a check that you and I didn't get cash that you send, send us another.

But i'm more concerned about is that you will deduct a donation that in fact was never received and deposited into our foundation. So uh, if you this year have sent us a check, I just wants you to check and make sure that in, in, in, in fact, made IT. But i'm sorry for the hits SAT tracking, but let me just one more time, say, with a big hug.

Thank you. Now I also want to talk about a major breakthrough that has come to me. And then i'm gonna talk about a goal, said, I have struggled with what to tell Young people about crypto currency.

And personally, I feel IT is just simply a speculation ah IT is something that I I know is a matter the value is in the eye of the beholder or the owner. I know when people own stock in companies, they believe those companies are more valuable than the people who don't own stock in those companies. We know that from the research that has been done, and that makes sense, that just human nature.

And I also know that that I have a somewhat difficult time explaining to Young people about the a dollar bill in the fact that if people are willing to exchange a dollar bill for goods and services, and that we trust that dollar bill to have some value, now we also know that there are obligations that people have made to us and we trust they will fulfill. Those obliges, like when we loan money to the U. S.

Government, we trust they will payoff back for having known that money to them that we also know that confederate bonds failed to be able to to be paid off because they were not able to pay off those promises they made. So we know it's not unusual in history. The people who said, I promise do not fulfill their promise.

So there is this grey area about how do we put value on things. And IT IT. Finally, finally, I got IT this last week, something I can now use with my kids, with the Young people that I talk to at western a about cypher currency.

And I am not making fun of crypto currency, but but I think there is some will lesson in this recently had an auction and art auction um A A piece of art was was sold for five point two million dollars and here's a plus, the people, the person who bought this piece of art paid the auction ears from, I think, south bees. But that paid a million dollars to the people who actually sold this piece of art and what this five point two million dollar piece of art is, and i'll say is that could be was, but alpha is. But IT was a banana, I believe, a real banana with a piece of dark tape holding IT to a wall.

Now i'm not sure whether IT was would actually be considered of a frame that IT was inside of a frame, but IT was on a wall. And and I I looked at that, I thought, how could somebody pay five point two million? And there you can go read about IT and the the people who bought IT and the people who think it's art and and and can justify that five point two million, they explained, I still so don't get IT, but they do explain IT through their eyes.

That is a five point to million dollar banana with probably twenty sense of a dark tape. I mean, it's it's I say it's ludicrous, but it's not ludicrous because the exchange was made. And so it's what somebody is willing to pay.

And so I continue to struggle on in my search for understanding, even though i've read I read about crypto currency. I don't mean that I haven't read the articles and get some sense of what people believe, but IT is it's an amazing thing to see happening and I just cannot actually for them. But you know, to the extent that people trade and are they trade in crypto currency, they trade with paper dollars that many people think are worthless, it's it's part of the of the process of a being in the financial world.

And I want to talk about the part of the financial world that I think is really important, and it's the part of the financial world that we really don't do for you. And that is setting goals, setting your goals within the financial part of your life. And it's a huge undertaking.

And really, if if if I could help somebody with their financial goals, I would have to sit down and spend hours with them, understanding who they are, what is the need for the money, what is their relationship with their children, what, what is their view of retire, but what is their their view of death, what is their view, what they, what, what purpose they have for the rest of their life and after their god? I mean, there are so many areas that have to do with goal setting that may just give you an example of goal setting that if I knew which of these three goals you had as an investor, I wouldn't know exactly what to recommend to you as an investor. But i'd have a start, and the goals would be the truth from these three.

And this used to be part of my presentation when I would do three in six award workshops free for the public. But I felt IT was important for people to know what they are basic. Goal is for the for for investing.

And I would give them three choices. One is, is what they really want to do is to beat the market. And I know there are a lot of people that, that is what they want to do with their investments. IT is not just about meeting their costs of living in the future.

They are in the middle of a kind of competition with others, and they don't even have to know the competitors because they can follow the market and they can follow the returns that people get in a particular mutual fund s like the S M P. Five hundred or the total market index or the small cat value. You, you, you can know how people are doing in those different kinds of investments.

And your goal is to believe that you beat them. Now another legion at goal. And these all have to do with trend to help establish the risk that an investor is willing to take. But another legitimate goal is to get the highest return within your personal risk tolerance. And if, in fact, that is your investment goal, then that's a really interesting thing to explore within investor when they feel that way.

Because IT seems to me that if you put me in charge of recommending an airport folio for you and you say you want to get the highest return within your rist tolerance, I need to find out what is your restore ers, how much you will into lose for a month, for a year, for five years, for ten years? What is the limit of risk? Because then my goal for you is to is to find that combination of equities, and let's assume some fixed income for most people that will allow you to get the highest return and expose you to that risk limit that you have established.

And that's really important. I think we have these fine tuning tables that i've been using for decades to help people understand the relationship between the kind of return they might get and the risk they're going to to to to be exposed to. So I know and I have lots of of of experts who will who will agree with me that if you are in equities and you are a single company owner that you have chosen to invest in, a way that you could lose all of your money are there.

This is, this is possible in later waves. Loan money to friends, you could lose all of the money you long do there. Give money to a corner as you can lose all of the money, but owning one company can lead to losing everything.

So most of you don't do that because most of you don't want to expose yourself using everything. So we look at diversified portfolios. What do we know about diversified portfolios up, for example, of the S M P V I ve hundred? Well, we know that its worst calendar year year over the last ninety six years is the loss of a little over forty three percent.

But that doesn't taken into consideration what happens in between because every so ten, and in my life， three times in one hundred and seventy three and seventy four, two thousand to two thousand, two and two thousand seven, three part of two thousand and nine, in each of those three cases, the S M P. Five hundred was down over fifty percent, which means that I have to be willing to expose myself. Two, eight, fifty percent decline.

So if i'm in that, say, the news dict, the technology index that changes things because now are looking at an index that historically has gone down from time to time, eighty percent. Now that's important to know because a lot of people are dumped in their money to IT into high tech companies, and I don't blame them for doing that. That's where the action has been, but that's the risk.

K, that comes with IT. So if you tell me that the most year willing to lose is fifty percent, but you have your money sitting in a technology fund, i'm just saying that you probably are exposed to more risk than you're willing to take in your maybe gonna end up player of yelling uncle and jumping out of that portfolio, as many did by the end of two thousand. Two after that eighty percent decline.

And by the way, as you know, many very popular companies went the bankrupt out of that great huge bull market run. So now we have to beat the market. And by the way, you when you beat the market, you also have to understand that.

That may mean that when the market is down fifty percent and you're down forty percent, you have beat the market and you are within the range of the risk are willing to take in order to beat the market. Now most people I have found when I had a chance to listen to them and ask questions, not willing to lose half of their life's savings. We encourage Young people to lose half of their live savings because we want them to be all equities, and we want them to be buying lots of shares of declining index funds.

I have to say that I don't want individual companies being uh, a dollar cost average, but we want them to dollar cost average certainly uh into uh, an index and something that we believe strongly. It's gonna come roaring back in the future. And the more cheap shares those Young people combine, the Better.

So every time you, you, you choose a particular direction as a goal, you need to understand the good part of IT and the bad part of IT. So we have the beat the market. We have to get the highest return I can within my rist tolerance, by the way, my wife and I the way.

The reason that we have chosen to be half in equation hf in bonds is because we are willing to lose twenty to twenty five per cent uh along the way and we have may have to lose more. We don't know what catastrophe convent could happen in the next five or ten or fifteen years, but we have chosen to take that position knowing that, that is the risk that we have built in. Then the third group, which in many ways is the most difficult to give guidance to, is the group that says, I want to find the lowest risk way to achieve the rate of return I need for the rest of my life.

The lowest risk way to get what return? Five percent? Six percent? Seven percent. And if we can establish what is that compound rate of return you need, then maybe we would be able to to to tell you what your asset allocation should be. But that means somebody has to do that homework of figuring in out what rate of return you need and the reason that you are the most difficult people for the industry to help is because you're you're not talking now about having the flexibility to be done a lot.

For example, the person who have said that I wanted just beat the market, but I want to beat the market and and i'm willing to, you know, up front, you can lose half your money, or if you're in the technology arena, you could lose eighty percent of your money. You know that go on in and we don't know when that's gonna a happen, but we know IT probably is gonna happen at some point along the way. But with the people who are really low risk takers and they're looking for a way to go through their life and not take any risk or is close to no risk as they can possibly get IT could be any strategy, could have a long period of terrible under performance, in which case, those people who are looking for the lowest risk way to get there might be facing the chAllenge of having to take money out of their investments.

Uh, at a time when this portfolio is struggling. I know back in the uh back in the late seventies and the early eighties, when people had a chance to be able to get ten percent, eight percent, I got sixteen percent on a five year C D, with no risk at, well, whatever inflation risk k might have been. But but anybody who was buying those cds back then, who were actually planning on getting some really good CD rate, maybe not sixteen percent, maybe not twelve ten, maybe not even eight, but thought, well, at least six percent would be a piece of cake.

And then IT turned out that three percent wasn't even a piece of cake. And so IT, it's complex in this goal setting because everywhere we turn, we run into some other circumstances that are unfriendly. And that is just really talking about the this relationship between risk and return.

Then we get into all the other kinds of goal setting that we need to do. And one is when we're going to retire. And the choices that you have of when you're gonna a retire have to do with what your goal is with your relationship with money when you retire.

We know lots of people who wanna retire when they have enough that they can take out four percent a year and believe that they're are going to have enough adJusting for inflation to last for at least thirty years. And there is a belief that most of the time, not necessarily always will, that four percent a strategy, depending on what you choose to invest in, work out the last the four thirty years. But the probability that if you if you relatively conserved in kind of middle the road, forty percent, fifty percent, sixty percent equity, you ve got a really good chance of being able uh, to to to to die with some money in the bank.

But you know, other people, they do want to actually die broke. There's A A popular book entitled I broke and an empty. I think of the risks of that and the risk of courses that you have longer.

But but the idea of dying broke, in fact, is an easy thing to do. You can simply annual tize all your savings into whatever you would pay you for the rest of your life, and IT will pay you monthly guaranteed. And the older you are, the more it's gonna a pay you.

At my age, I could probably get in eight percent return on my investments for the rest of my life, except when I die, it's all gone and broke if that's all I have. And social security is no luck there. When I die, you can, I broke and have lots of income while you live.

But every one of these choices that we, that we, that we live in now, in our case, what my wife and I decided that I would keep working until we had at least twice as much money as we needed to retire. I love what I did. And of course, I kept doing a dic, except with without pay, after I retire.

But all I did was teach. I didn't just teach when I was working for the maryland wealth management company. But now I worked for a foundation where I don't get any compensation, but i'm doing what I love to do.

And so all I wanted to be sure before I made the guaranteed to my wife, that I would never work for money again. Oh, we had plenty saved. So that not only did I believe we had twice what we needed, but that we would be able to take five percent out.

In fact, i'm looking at six. I mean, i'm eighty one and and that and and and we try to give away so we can twenty thirty percent year is not it's it's not like i'm an expensive guide to pay for. I I have enforced to close shop in once a year, whether I like IT or not.

I am not a great fan of spending money. I'm actually have a great fan of safety money. But I did make we did make that decision to wait until we had way more than we needed so that we could take out way more than we would have otherwise been able to take.

And the last thing I ever want to do is to be a burden to my, to a, our children are four kids. So there's another part of this gold setting. There's the lifestyle we want.

I love living in the northwest part of the year, and we d love living hino in the sun for part of the year. For many years, we did that in mexico, and we loved having access to the sun part of the year when I was cold in the north west. And of course, all that cost money.

And so that was part of our lifestyles and still is. So the goal setting, there are so many different levels of goal setting. There's the goal setting for giving away, plus the goal setting for what you're gonna end to live.

There's the goal setting for what we're gonna leave to others and what that money we leave to others is going to do. I'm talking, now let's save in a charity fashion. And there is what we leave to our children and all what interesting goals setting that we have to do when IT comes to leaving money for our children.

And that is when you have four children and you have more money, bless, say, more money than they really need theoretic icicles. And so you can just labor to him, let them do what they wish with that money. Or you could have three children that are really very, very a print with how they deal with money.

And a fourth that, sadly or happily, I guess, is another way to look like. And we will spend IT all and does not save and does not prepare for the a financial future. And yet you love them the pieces and you're really concerned that you're going to leave them this one.

Number one, you sacrificed over a lifetime you to to have the money to put away. Then you put IT away in in a prudent fashion, deleted, grow, but to be there and and and there's more than what then you need to get through your life. And now it's left over.

Do you have a goal to leave that to a child who will then use that money to have a good time for a few years? Now some parents believe that that's up of them. That's not our problem. They're gonna do what they want to do.

Other parents who say, look, the one of the best things that ever happened to me was I I worked hard, I saved and and we had enough money between social security and the pension I received to meet most of our needs. And then we had additional money, which allowed us to do some extra things. But the needs that we had were met by a combination of the social security and the pension.

And man did IT feel good to have that guarantee check coming in from that insurance company, your corporation. However, I got a nevertire ed, you got paid and you didn't care whether the market was up or down month to month because that pension was goldin. Well, if that pension was golden for you, why wouldn't you want to be able to leave that access money to that child who, you know, I loves to spend? And this could also be a situation were concerned for a divorce or somebody mean and that your financial planner.

But there's all sorts of reasons you might decide to leave the money that you're leaving to them to be put into an annualize, a single premium life that pays them a monthly checked for the rest of their life. They wanna blow that check month and got blessing, but it'll be another one the month after and the month after and the month and the year and the decades after. Those are the kind of of of choices we have in goal setting.

How are going to treat our money after we're done? A lot of people die without a will. they? They had the state work that out. I like the family. Somehow you work IT out well. Those are all parts of the goals and and and we have the goals in terms of travel and what we're going to do in retirement. That's all part of the goals set in that somehow is going to be impacted by the money that we have.

And so IT, IT, IT seems to me that one of the ways we could spend a few blocks that would be really meaningful is even though you're getten IT together as a due yourself investor that um I have found IT of great help to work with people who are professional councillors and goal setters. And that's not always about investing and and those specific questions, but there are people, as you know, financial planners, but great financial planters are also psychologist and life coaches. And check in with people who are experts and make sure that you're thoughts about all that goal setting that you could or should be doing.

And if you just wanna get an idea where you might start as you do a search for retirement goal setting, personal financial goals, any of the obviously, there are books about the psychological side of retirement that have to do with gold setting. But I know from my experience, from everything I know, from the experts, I trust that having the goal increases the probability of success many fold. And that's what I want for you.

And I will be as pleased as can be if between the now, but between now and the time, I no longer can do what i'm doing here with our foundation, that things will have work well for you. And of course, I I hope that they continue long after I am gone. And one of the things I have a goal is to set this up so that the work that we are doing continues after we're done.

We know, we know, we've got that covered, that western washing university, where my wife and I are committed during our life and after our life to fund what we believe will be the guarantee that every student who goes through western, we ll get a financial literacy y course that will set them off in the right goal setting direction within the important financial steps. They will have to take a particularly early uh in their uh in their life, out of college. So goal serves a big deal.

Most people will. I'm one of them. I said a lot of goals about losing weight.

I said a lot of goals about taking care of my physical self. And and have not have been a i've been a great goal setter. I've not been as disciplined as I would like to be.

But my hope for you is that you will develop those goals that are most meaningful to you and that you will find the discipline to help you get there. Our job is to give you the evidence that we think is important so that you're in investments will be handled LED in a way that you will reach your goals in the note field. I'm going to include a some recommended reading that might be helpful along the goal set impact. And um and again, a very happy thanksgiving to and your family.

And up see you next week.