The Blue Roof

 Yesterday I wrote about insanity. An important idea to consider. But today I want to bring some balance and write about another form of craziness.

 When I said yesterday that you should evaluate your retirement plan, I was dead serious. The problem is that some people have a funny notion to check daily!

 It is pure craziness to invest today and expect to make a profit tomorrow! It is different if you speculate! When I buy futures and play the currency market, it is like a job – I am involved full time and I might lose a lot of money if I am not on the ball. But that is not investing!

 It is pure craziness to invest for a 10 or 20 year time frame and to expect your investment to increase in value by the minute – and to be despondent when it does not happen!

 This craziness about short-term gains in a long term portfolio leads to an even bigger craziness! Suddenly people start making changes to their portfolio’s as if they are indeed trading. Always selling and buying in an effort to make more profit. Over and above the fact that dealing costs may wipe out the profits, they very often sell at a loss in an effort to buy a new investment that will make a profit.

 Understand this – I have also sold shares at a loss to rather buy a better performing share. That is not what this is about. This is about the person who buys a share in expectation of better results and then promptly selling two days later because the share price did not move.

 Craziness in this sense means that you confuse the purpose and time frame of your investments and your investment activities. And you can only lose!

If you are not like this, you may not believe it, but there are people who phone very excitedly to say:  “did you see investment XYZ is up by so much!”  ANd then the next day they phone very aggravatedly to say: “did you see investment XYZ is down?  What’s going on? What are you doing about it?”  That is craziness and a pain in the you-know-what!

 Insanity, one definition (the only one I know!) says, is to do the same things expecting different results! Think about it. You swing the golf club in exactly the same way and hook the ball. You repeat the exact same swing, and you hook the ball. The truth is, as long as you repeat the swing, you will always hook the ball. Makes sense, does it not? So if you keep on with the same swing expecting to slice the ball, then you must be …?

 That is why the saying says: if you want things to change, you have to change! For things to change, you have to do it differently. To do it differently, you have to think differently!

 I hope you agree with that! And that was the introduction!

 When we look at financial freedom and retirement, we normally get only one swing! There is not a repeat. So finding out if the swing we are using is working or not is not so easy. It is make or break. So how do you know that the plan you have for retirement is working or not? Rather important question, this! Do you even HAVE a retirement plan?

 Anyway, how do you know you will be able to retire?

 First step, look at the results from the time you started to the present moment. What have you put in and what is it worth. What can you do with what you currently have? If I can get back to the golf swing, it is not only the moment of impact that determines the flight of the ball, it is the back swing, the down swing and the follow through. Or as somebody told me a long time ago when I took up position behind the ball, you will slice it, I can see from the way you STAND. In other words, the end result is always determined by the sum of all our small actions! And that is why you need to look at your plan and benchmark it as you go along.

 Answer this: I am satisfied with my retirement plan, because …

 You will not get a second swing, but you can look at other people who went before you! What happened to other people who followed the same plan that you are following? Who was successful? What did they do and how does it compare to what you are doing? Are you doing exactly the same? Will it work for you?

 What about people who failed? What did they do? How does your plan differ from what they did?

 Why do I write this post? Because I think too many of us are too optimistic! We think we have the PLAN, when in fact, we are heading over the cliff like a bunch of lemmings! We read and hear about 95% of the population not being able to retire, and we think we are part of the 5%, but there are no facts to substantiate the optimism! When we investigate, we find we are repeating everything that the people who failed did. But we just keep on with the same old thing, and another lemming goes over the cliff, but we just follow in good faith!  We don’t ask what happened to the lemming before us, we just assume he knew the way.  And there goes another lemming, and you are next …

 Insanity is repeating the same action, expecting a different result! How many sane people are there?