GUEST: Jonathan DeYoe, Founder and CEO of Mindful Money and President of DeYoe Wealth Management
Financial planning has always seemed like voodoo to me. Luckily, I have a podcast and can interrogate the experts.
Turns out, there are only 3 things you need to do for successful financial planning. The trick is sticking to them.
He joined me on the show today to discuss why so many people are so bad at financial planning and what we can do about it.
- What our culture gets wrong about financial planning
- The best way to approach investments
- Rethinking our definitions of success
The cultural problem
Jonathan’s interest in investments began at a young age.
He bought his first stock at 9 years old. By the time he finished grad school, he was selling investments for Morgan Stanley.
His interest in financial planning was sparked as an effort to improve investments.
See, by the time he had started his own firm in 2001 …
He realized that our culture was completely broken when it came to our attitudes toward investing.
“The problem with investing — in our culture, specifically — is that we’re almost always market-focused and-performance driven. This is a problem because neither the market nor performance are ever in any way within our control.”
The problem is we tend to see investments as market-focused and performance-driven. But, if any advisor were honest about it, they’d admit they can’t predict or control markets. And the vast majority of people who try to time the markets fail.
Markets and performance are never — in any way shape or form — in your control.
So, forget the COVID-19 get-rich-quick fantasies …
And get to financial planning.
The individual solution
Instead of trying to be the high priest or priestess of economic black magic, we should be a little more skeptical.
We can’t control markets, but we can prepare for them.
If we change from a market-focused, performance-driven attitude to a goal-focused and planning-driven attitude, we’ll not only save money on Magic 8-balls … We’ll actually have a chance to improve our long-term financial outcomes.
So, how do we do this?
There are 3 basic principles you can follow to save yourself a trip to the financial witch doctor.
- Plan appropriate asset allocation.
- Have a broad diversification in your investments.
- Rebalance regularly.
That’s it. That’s all you need to do.
“The key is consistency. Not brilliance.”
But most people are absolutely incapable of following these 3 simple steps.
The steady stream of noise from the financial media that permeates their televisions and radios convinces them they are, themselves, financial gurus.
You are not.
So, what’s the solution to actually sticking to these 3 tenets?
For Jonathan, it’s mindfulness. It’s cultivating the ability to tune out the noise and center yourself on your financial goals.
And his method works a lot better than those offering financial divination. It’s not voodoo. It’s science and discipline.
One of the biggest contributors to our broken investment culture is… well, our culture.
In particular, how we define success. You want to plan for your future. You want your dreams to become a reality.
But, somewhere along the way, you’ve convinced yourself that to be happy, you need to get so stupidly rich you can … I don’t know, hunt people for sport? Play polo?
Whatever the fantastically rich do for fun, that’s not what success is — money itself isn’t success.
“Your definition of success should involve things that make you happy.”
Success is pursuing happiness for you and your loved ones. It’s accomplishment. Passion.
And sure, for some people that means being the best at playing hockey on horses.
But if you want a reason to stick to the 3 principles of sound financial planning and not go bet it all on black so you can be the talk of the country club …
Just think about the reasons you are planning for your future in the first place.
The people you love, your passions and your security are all more important than the wacky antics that come from hunting Jon Leguizamo.
So tune out the noise, stop trying to be a financial sage and prepare for your future.