Investors: The Price For Success Isn't Your Money

Investors: The Price For Success Isn't Your Money

by: Brendan Magee

A short time ago I met for a review with a client, a very nice hard working young woman. When I say hard working I mean 60 hours a week, and with her schedule she is not able to make a lot of the group coaching sessions I hold because she is usually on the train or trolley coming home. Since we haven't had as much coach/client interaction as we would like I have arranged to meet with her from time to time on Saturday mornings.

At our last one on one session she blurted out, "Why do I have to meet with you and engage in these coaching sessions? You have all my money. I am not involved in the day to day management of the money. Why do I need to engage in something I am not interested in?"

Good questions. Why does an investor have to be engaged past the point that they have decided to give their money to an adviser? After all, isn't that exactly why you hire an adviser in the first place? Isn't the agreement that the investor pays the adviser to handle their investments? Plus, wouldn't it be great if all you had to do to guarantee your success was hire the right adviser? Then you would be free to go about the rest of your life unfettered by any investing or financial concerns.

Unfortunately, this point of view is a little short sighted and if the investor doesn't deal with this misconception their failure as an investor is pretty much guaranteed.  Yes, money has to be invested prudently and managed according to the rules (Own equities, diversify, buy low/ sell high), but that is not what is going to make or break your success as an investor. Your behaviors-what you do, what you don't do, what you allow to be done with your money, and what you don't allow to be done with your money- from the day you open an account til the day you leave this Earth will more than any thing determine your success as an investor.

I am reminded of a documentary that I saw on health clubs like Bally's and Planet Fitness. The gentleman being interviewed had come up from the fitness industry to own his own chain of gyms and he said one of the things that struck him was when a former gym owner talked about a gym's most prized group of members. Those being, the members who signed up but never show up. Every month they debited those members checking accounts for their membership dues of $10 to $20 per month, but never had to cover the expense of providing those members any services.

Now I am sure that like investors who opened investment accounts with the intention of attaining wealth, those same gym members joined the gym with every intention of losing weight and becoming healthier. Unfortunately, their membership dues were the least of what it was going to take to lose weight and get healthier. They actually had to show up and engage in the exercises and eat right.In and of itself these activities are not fun and enjoyable. The great idea of losing weight can easily become less of a priority the further and further you move away from the conversation.

Rather than getting up when the alarm goes off, a few more hours of sleep can be the better option. A cheese steak rather than the salad can be easily justified when you promise yourself you will stay on the treadmill 15 minutes longer the "next" time you go to the gym.

As their are distractions with working out, there are just as many with investing. The behaviors that assure long-term investment success can easily become one great big inconvenience and set aside for another day.

"I know I shouldn't put so much money in one stock, but I'll just do it this once. I know track records are worthless, but man this guy's been on fire for the past five years. I'll just ride with him for a little while and get out after a year or two." Be it exercise or investing, there is always someone who is more than happy to profit from your dysfunctional behavior. 

Prudent investing and healthy life styles are conversations that are too easy on our own to disengage from. Unfortunately, the cost of disengaging from either isn't felt right away. Eventually, they are way higher and more permanent then any of us ever bargained for.

Take a look at some of the anti smoking ads on television. They show people having had limbs amputated, losing all their teeth, etc. If they don't scare the bejesus out of you and disuade you from smoking, nothing will. For investors go to Youtube and watch an episode from PBS's documentary series Frontline titled "The Retirement Gamble." See what some of those people are dealing with as a result of their imprudent investor behavior. It will send a few chills down your spine. Money cannot ever protect you from your own dysfunctional behavior.

The ideal solution is to start with a purpose, something that is big enough and means enough to you for you to engage in a different set of behaviors. You also need to revisit that purpose form time to time. Out of sight means out of mind.

Wanting to be around for my children's graduations was a big enough reason for me to get up the past two years at 5:00 a.m. four days a week and engage in a very intense workout at the UFC Gym (Have lost 20 pounds and kept it off is my endorsement of their services).

For investing you need to have just as strong and meaningful purpose. Then realize it will be easy to walk away from it and that on your own you will not be able to maintain the discipline necessary to fulfill on your ultimate purpose. Get a coach and make sure his or her purpose isn't money. Yes, you will pay for their services, but it has to be about way more than money. Be it money, exercise, or anything worthwhile unless your heart and soul is engaged, ultimately you will fail.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go e-mail brendan@coachgee.com or call 610-446-4322.