Be the Boss of Your Money: It’s the Key to Financial Security

In 2008, two years into his retirement, I watched my father sink into a deep depression due to the financial crisis. He had adhered to the conventional wisdom of obtaining a good education, maintaining a solid career, and saving consistently throughout his working life. A conservative man, he was wary of new investments, believing that savings in bank accounts with good interest rates would suffice. The 2000 dot-com crash reaffirmed his distrust of the stock market. However, as interest rates fell and money printing devalued savings, he sought advice and was persuaded by a trusted financial advisor to invest in mutual funds and mortgage-backed securities.

When the 2008 Financial Crisis hit, his substantial portfolio, meant to last 30 years, was halved, plunging him into despair. The impact on him was profound, and even more so for his wife, who had no knowledge of their financial situation—sleepless nights, constant anxiety, and a sense of hopelessness weighed on them both. In Canada, those who participated in a class-action suit were eventually compensated, and my father was among the fortunate. Yet, the psychological damage was irreversible. While his wife fell victim to cancer, he moved his investments into cash and cash-like assets, missing out on one of the greatest bull markets in history, and relied on his principal to handle the medical bills as the economy stagnated in a zero-interest environment.

Similar Patterns

Reflecting on his experience, I recognize a similar pattern among people I’ve spoken to about cryptocurrencies. Individuals who invested during the market's run-up in 2020-2021, then lost money in the eventual crash, deciding they will never invest in cryptocurrencies again.

This behavior isn't confined to just cryptocurrencies. There is a whole industry of financial newsletter writers who offer investment recommendations daily to thousands of followers. Based on some of the feedback these newsletters receive, it’s clear that many people purchase recommended investments without any further evaluation or overall plan, leading to frustration when their portfolio doesn’t perform as advertised.

A common response when losses pile up is to walk away from investing altogether. However, in an economy where salaries haven’t kept pace with inflation for decades, most people have no choice but to build an investment portfolio to support themselves until the end of life. This is especially true today, when life expectancy can extend 30 years past mandatory retirement and social security programs are at risk of default.

Considering these scenarios, I see a pattern: individuals invest their hard-earned money in assets they don’t understand, based on recommendations from people they have no way of judging as credible. It’s not that these advisors aren’t credible, but how would you know?

Who Do You Trust?

The underlying issue is that many people don’t believe they can make good financial decisions on their own. They trust that someone providing recommendations must know more than they do. But here’s the thing: if you don’t know how to make good investment decisions, how can you assess how well the other person can make investment decisions?

Many think they are safe when they entrust their financial decisions to others, but my experience is that the only path to lifelong financial security is taking personal responsibility for your own financial decisions. By abdicating these decisions to someone else, you are effectively exercising your responsibility, just not with knowledgeable intent.

It also begs the questions:

Do you believe that another person cares more about your financial well-being than you do?

If they err in their decisions with your money, will they take the loss and make sure to keep you whole?

Fascinating Journey

In 2008, I realized the importance of becoming educated in my own investing. Conversations with my broker at the time demonstrated that the only person who could assure I met my personal financial goals was me. I began reading books about those who were financially successful to understand how they maintained their wealth through every kind of market. I read about the Rockefeller's and the Rothschild's, and how their strategies and long-term thinking preserved their fortunes across generations. I also found Michael Masterson's books, such as "Automatic Wealth" and "Ready, Fire, Aim," invaluable in learning how to think about investing and financial growth.

As I read newsletters, I became fascinated with the intricacies of how the world operates, the stories of individuals and companies who were doing amazing work to improve the world, and learned the tools for participating in some of those stories by putting my money to work to support their efforts.

Taking Responsibility

What I learned was that investing is more than just putting money into random investments and hoping for the best.

To ensure your portfolio grows and is available when you need it, you must become financially literate beyond just saving and budgeting. You need to build a plan, set goals, and become knowledgeable about the things you are investing in.

You need to become aware of global and economic trends, understand government monetary and fiscal policies, and recognize how laws and government decisions impact your investments in the short and long term. With that awareness, you can make strategic and objective decisions about your investments at key times, ensuring your assets don’t end up in a trough just when you need them most. With that knowledge, you can achieve a sense of peace knowing you’ve prepared for any eventuality.

Only you can ensure you don’t fall into the same trap as my father and his wife, years into your retirement. Whether you do it all on your own or hire someone to advise you, every financial decision is still yours, whether you acknowledge that responsibility mindfully or not.

And whatever the outcome of your decisions, the consequences, good or bad, are also yours alone. In my opinion, the only path to financial well-being for life is actively embracing financial literacy and personal responsibility for making your own financial decisions.

First Step

Fortunately, it’s not nearly as complicated, complex, risky, or time-consuming as you might think. The tools and information you need are at your fingertips if you choose to take action.

Start today by exploring resources such as financial literacy courses, and fascinating books about real people like "Titan: The Life of John D. Rockefeller, Sr." by Ron Chernow, and "Fortune's Children: The Fall of the House of Vanderbilt" by Arthur T. Vanderbilt II.  

What steps have you taken towards becoming financially literate? What resources have you found helpful in your financial journey?

Share your thoughts and stories about how you are taking control of your financial future or feel free to ask questions about how to get started.

Take the first step towards understanding and controlling your financial future - you be glad you did, and like my clients you may even find out that it's "SO MUCH FUN!"

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