Money Trailguide, No. 8

Welcome back….I decided to stick with the Return on Life theme this month as we plug our way in to the new year.  I hope last month’s article stimulated your creatively a little, and that this month will continue with the theme of contemplation about which trail, no matter how unique, is your best trail to follow.

Included in this months newsletter is:

  • Quick hits…What I’m Reading
  • Are You Getting Your Best Return on Life, Part 2

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Thank you,

Joshua E. Self, CLU, ChFC, CFP®
Managing Partner

Quick Hits…What I’m Reading

  • The Man Who Was Thursday – G.K. Chesterton…a Christmas gift, I picked this up from my book stack a week ago and was sucked in within the first few pages.  Chesterton’s writing is detailed to the point of feeling present on the foggy, cold streets of Victorian-era London. I’m a little embarrassed I haven’t read this before now.  It’s not a long book, but is quite the thriller!
  • Falling Upward: A Spirituality for the Two Halves of Life – Richard Rohr…this is in line with the concept of maximizing your Return on Life, so if you like the ROL articles, I highly recommend this book.  Rohr is a insightful writer who effortlessly blends the human condition, psychology and spirituality together in an understandable manner.  He has some great one-liners! 
  • Why You Should Sit out the Mayhem – The Wall Street Journal, Jason Zweig…I referenced this article in my email blast last week, but the timeless information is too good not to highlight again.

Are You Getting Your Best Return on Life, Part II

Most of us are familiar with the concept of Return on Investment (ROI), but last month we considered a variation to this measurement called Return on Life (ROL).  Goal planning experts will remind you that you must measure what matters, and ROL is an attempt to consider measurements around ‘How well are you doing in living the life you want, with the money you have?’

Last month, we considered how you can balance the books between quantitative and qualitative factors in developing a financial plan.  The suggestion was that one can do this well by focusing on ROL to ensure that you pay as much attention to your non-financial goals as your financial ones.

These calculations are important and necessary, but work only if you understand the qualitative goals your investments are meant to fund. In the traditional financial planning model, the primary components include asset management, risk management, debt management, tax planning, estate planning, and income planning. While each area is essential to your financial well-being, there is an underlying assumption inherent in the solely quantitative approach used to perform these functions: everyone is essentially the same, and the only thing that really needs to change from one person to the next is which numbers get plugged into the formula. This is probably not an assumption you would want someone to make about you.

What are your core values?

How would you answer this…It all comes down to _______?  This probably gets you pretty close to a core value.  Your values and principles with money are not the same as everyone else’s, nor should they be. The most important aspect to be derived from the numbers is to achieve the quality of life you desire. The numbers do not exist to drive life but to support it.

Because many people view retirement as purely an economic cliff from which they will jump once they’re in their 60s, they have done little – if any – work on all the life issues accompanying such a transition.

Using money in support of life

It is important that your life before and during retirement is both challenging and enjoyable. At some point, almost all of us will require help – meaning we’ll have to make contingency plans. These contingencies include long-term-care insurance, in-home care, and the like. These investments are a natural part of ROL planning because they help you continue to live a full and balanced life as long as possible.

When you achieve balance – and as a result, true financial freedom – you will still be confronted with issues that organically arise with retirement. These manifold issues include the following:

  • How you best spend your time and energy
  • How you address your personal health and well-being
  • How you continue to challenge yourself
  • The role you play in your parents’ and/or children’s futures
  • The kind of legacy you want to leave
  • Your definition of success

It is important to understand the impact of money on every area of your life. By engaging in a financial planning process focusing on what’s happening in your life––adjusted financially to facilitate those happenings––you will reach the ultimate goal of using your money to create a better life.

PLC Wealth Management, LLC (“PLCW”) is a state registered investment adviser located in Raleigh, NC. PLCW is registered in the state of North Carolina and in compliance with the current registration requirements of the states in which PLCW maintains clients. PLCW may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements.