Just Testing Your Shock Absorbers…

Brett

POSTED BY

Brett Simpson

Financial Advisor, Portfolio Manager & Chairman

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I have spent my entire 39-year career (and counting…) helping people who seek advice on how to plan financially for a future of security and choice. My colleagues and I have helped thousands of individuals, families, and businesses to plan through uncertainty by not spending all their income, turning their savings into investments, compounding their earnings with continued savings, and eventually turning their investments back into income for life. Along their journey, we’ve advocated to protect against catastrophic losses: of human capital earning power (death, disability), of un-absorbable asset damage (fire, weather), and of unforeseeable liability (accident, injury). Together, with clients committed to their goals of choice, we’ve demonstrated that our financial planning process, supported with accredited and experienced coaching advice, can deliver excellent outcomes to one or more generations irrespective of ongoing investment turbulence and uncertainty.

It is important to remember this when we are constantly bombarded with negative headline news or a simple investment statement. The uncertainty of change in geopolitical, governmental policy, and economic and market risks will continue unabated in future, and with each new turn we can choose to react or to respond tactically. That’s not easy. We are all hard-wired for preservation of our species. We want to avoid pain, and financial losses hurt. Fear and anxiety are natural in the face of the unknown and most of us crave some form of predictability to reduce our stress.

This is where a well-structured financial plan and the embedded investment policy statement can help provide a “road map” for the journey of a lifetime. The cost of transport will inevitably increase, weather will change along the way (some storms may be severe), there could be detours or re-construction that changes your path, but the destination remains steadfastly your choice.

I know it is hard to have confidence sometimes despite experiential reassurance. It always feels different this time. Our natural “recency bias” ensures this. For many of us we are experiencing unmapped territory and our GPS is struggling.

As we collect our bearings and strengthen our resolve to reach our desired destination, it is important to remember that logic-dominated financial planning does not rely on predicting the economic weather, investment landscape changes, or inflated costs of transport. Journeys of the past, some we’ve never travelled, are always instructive in the assumptions we can make about our future path. Of course, the road will never be the same, but the signposts will be recognizable.

Just as the driving principles of steering and speed don’t change, so too will the investing principle behind buying high-quality businesses, at a discount to their future earning power, remain a consistent way to build wealth and hedge against rising costs. Successful businesses take raw materials and labour to actively make a desirable good or service and sell it at a profit. That profit will accrue as retained earnings and grow the value of the company over time or be paid in part as a dividend.
Therefore, we need only “predict” what the past has proven: No matter the weather, terrain, or cost of transport, a well- diversified portfolio of businesses has been and will be the most effective vehicle of achieving your journey up and down the mountainside of life.

Your financial advisory team can help keep your shock absorbers well-oiled.
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