As a follow-up to our popular post entitled How we manage our money and with recent inspiration from Ben Carlson’s post related to things he doesn’t believe in, we thought it would be fun to post an article about our own investing principles we believe in.
This list today includes our own, shared philosophies when it comes to money management along with asset decumulation principles we’re both working through in real-time. Our list includes what we’ve also learned from our valuable clients/members of this site who’ve had their own DIY investing journeys to manage – so it’s what we pay forward to other, new members here too. :)
Read on and enjoy and we look forward to learning from you what investing principles you believe in too.
Investing principles we believe in
As referenced in other posts on our site, over the years of running our respective sites, Joe as the founder of Million Dollar Journey and with Mark and his continued labour of love called My Own Advisor, we have learned and continue to learn more about ourselves as we age along with the huge, changing body of knowledge that is personal finance and investing.
“There is no end to education. It is not that you read a book, pass an examination, and finish with education. The whole of life, from the moment you are born to the moment you die, is a process of learning.” – Jiddu Krishnamurti.
How true.
In no particular order, here are the investing principles we believe in.
1. Long-Term Focus
We believe that successful investing requires a long-term perspective. Markets can be volatile in the short term, but we prioritize investments that are likely to yield sustainable growth over time. This approach allows us to weather market fluctuations and capitalize on opportunities as they arise.
2. Diversification is Key
Our investment philosophy emphasizes diversification across asset classes, sectors, and geographies. By spreading our investments, we aim to reduce risk and enhance returns. This belief is rooted in the understanding that different assets perform differently under various market conditions.
3. Cashflow is King
In one of our very first posts on this site designed to support all DIY investors from beginning to end on their investing journey, we mentioned Cashflow is King.
We still believe that because we both invest that way.
Just like managing a business, your personal finance household should be focused on cashflow for these two key reasons:
- Efficient cashflow management ensures enough liquidity to cover your expenses, invest in growth opportunities (i.e., more stocks) should they arise, AND withstand economic downturns like bad stock market cycles.
- Positive cashflow acts as a safety net against unanticipated costs or variations in your expenses (i.e., like a small financial emergency at home). Like any company, it provides financial stability without having to borrow money or sell assets when navigating through a (financial) crisis.
Our portfolios both rely on a mix of individual stocks that pay dividends, low-cost ETFs that deliver growth, and some cash holdings/cash equivalents for strategic buys. We have no plans to change this hybrid investing approach!
4. There are many ways to invest
Similar to Ben’s post, we also believe:
“Everyone has a different emotional make-up and lesser version of themself. Plus, experiences and circumstances can shape your attitudes towards risk and return.”
In working with 100s of clients/members on this site via our low-cost services, we can confirm no two (2) DIY investor portfolios, spending goals, income needs, and taxation strategies are exactly the same.
Beyond that, while there are a few key ways to decumulate your assets in retirement too what rarely works for one individual should be copied exactly for another individual or couple.
How to Decumulate Assets in Retirement
There are a lot of strategies that can work well over time-related to asset accumulation or asset decumulation.
You or your family just need to find and follow the methods that work for you.
5. Nobody can predict the financial future
Predicting the future is very, very hard and as a result, everyone is pretty bad at it.
Experts suck at it. DIY investors are terrible at it. We can’t do it. You can’t do it either. :)
Accept this truth and you’ll be better for it – designing plans and contingencies when things don’t work out the way they should to navigate around.
6. Everyone has a sub-optimal portfolio
Did you predict tech stocks would go to the moon over the last decade, and go all-in on them?
Did you correctly assume the U.S. stock market would be on a huge bull rull as to abandon Canadian and foreign stocks for higher returns?
Of course not.
Everyone has woulda, coulda, shoulda decisions in their rearview mirror. Hindsight as they say is 20/20.
Are You Making Some of These Common Portfolio Mistakes?
The best thing we can all do is design our respective portfolios in ways that meet our clear objectives, in ways that help minimize financial risk, and in ways we can actively monitor both our objectives and ongoing risks as we move along with our lives.
7. Planning (and re-planning) is essential to long-term success
At Cashflows & Portfolios, we understand that effective planning is crucial for investors approaching retirement. We both regularly use professional planning tools to ensure they are on track and Joe (and soon Mark) would not have taken the leap without the confirmation from the projections work we do!
As you transition from the accumulation phase of saving to the decumulation phase of spending, the complexity of financial decisions increases significantly. This retirement income plan serves as your financial roadmap, helping you identify income sources, estimate future expenses, and set realistic spending goals aligned with your desired lifestyle.
A comprehensive retirement strategy not only prepares you for the financial aspects of retirement but also addresses potential challenges such as healthcare costs, longevity risk, and how much is left to your estate based on your retirement spending. By proactively managing these elements, you can ensure that your savings last throughout your retirement years, allowing you to enjoy the activities and experiences that matter most to you and your family.
Moreover, a solid plan provides peace of mind, empowering you to navigate market fluctuations and unexpected life events with confidence. At Cashflows & Portfolios, we believe that investing in a well-thought-out retirement plan is one of the best decisions you can make to secure a fulfilling and financially stable future. Remember, it’s never too early or too late to start planning—taking action today can lead to a more comfortable tomorrow.
Investing principles we believe in
As you have hopefully appreciated above, while personal finance and investing principles apply to many of us there are no hard-and-fast rules to follow.
We believe at Cashflows & Portfolios, personal finance, and portfolio management decisions are incredibly unique and personal. Instead of agonizing over the world of investment choices out there, we encourage all DIY investors to develop a simple plan that clearly defines your objectives first and then manages your risk tolerance against those objectives over time. Rinse and repeat for any age.
We believe a reasonable portfolio and reasonable decisions can be plenty good enough to meet your long-term financial needs.Â
Need any support with your retirement income projections?
Knowing how to save and invest wisely, to help you get the most out of your portfolio, is something we can help with, including tailored support for your own reasonable retirement income plan. We enjoy helping different DIY investors who have different objectives and goals!
As DIY investors ourselves, we offer up our time and expertise to help other DIY investors, we’ve been more than happy to support well over 100 clients at the time of this post in just a few short years.
We know we can help you out too at a low cost compared to services charged by others!
If you are interested in obtaining private projections for your personal financial scenario, read more about our retirement projections services.
A reminder to those who have recently joined our readership and new fans of the site – our site continues to grow thanks to you!!
Thanks to all readers and members of this site. It’s a pleasure to engage with you.
Mark and Joe.