A Ride Around the Block

By Geoff Schaefer

Geoff is a Wealth Advisor with Intergy Private Wealth. He writes for The Steadfast Fiduciary to help people live with an abundant heart, open mind, and boundless generosity.

June 29, 2023

We tend to fear most what we have the least amount of control over. Control give us confidence.  But what do we really have control over? Can lack of control lead to a paralyzing fear?

Just the other day, I took a walk around the neighborhood with my family.  My daughter has just become able to pedal her bike around on her own.  She took this opportunity to take her biking skills from our little cul-de-sac to the entire neighborhood.  My wife and I reluctantly agreed knowing that likely, we would be carrying a bike at some point during our trek.  Surprisingly, that did not happen.  She rode the bike the entire way.  What was perplexing was my daughter’s perspective on hills.  Any uphill, no matter how big or steep, she navigated with grit and determination. The downhills, however, were a growing experience for her. She was timid and reluctant.  Even though she knows how to brake, the downhill seemed like they never ended as we descended at a snail’s pace. What should have been the easiest part of a bike ride for most of us, became her giant to slay this day. With much coaching and encouragement, we completed our walk.

Thinking back on the walk, she did not fear what was difficult or physically exhausting, for that would have meant the uphills would be far more daunting. What my daughter feared was her perceived lack of control on the downhills. Even with her feet firmly on the pedals and the ability to completely stop at any given time, the acceleration of the bike was not her doing. She felt out of control.

To anyone above the age of five, this whole situation will and should seem irrational.  It absolutely is.  But, before we point of this speck in my daughter’s eye, lets address the plank that exists in our own.

In financial planning, and life in general, we think planning will equate to control and the absence of surprise. The more time I spend allocating my investment portfolio, the less of a chance I am caught off guard by sudden market moves.   By eating healthy, I will avoid a life-threatening diagnosis. If I budget down to the cent every month, my family will never be lacking. If I rotate my tires every 7,000 miles, I’ll never be stranded on the side of the road. Face value, all of these actions are good and I hope everyone reading eats their veggies and rotates their tires.  What they also represent is our desire to control a situation we fear facing. A situation, that when it comes down to it, is completely out of our control.

A first-time investor who put $10,000 into the S&P 500 in January of 2022, would have found themself with less than $7,500 by October of 2022. The same index that averaged nearly 11% annually over the last decade, has them down 25%. Was this a bad investment decision?

Cancer Research UK has cited that 4 in 10 cancer diagnoses could have been prevented. So, eating healthy, not smoking, and using sunscreen are absolutely a great idea, but would not have changed the outcome in 60% of cases.

In a 2022 Federal Reserve report, it was found that 46% of US households had experienced an unexpected expense in the past 90 days and that the average cost was around $1,400 per occurrence. I know we budgeted and have an emergency fund, but is it ever fun to pay over a grand for something that blindsided you.

AAA estimates that 58% of roadside assistance calls are preventable with regular vehicle maintenance. So, what about the other 42%?

When it comes to your financial plan please:

  • Make a budget.
  • Have an emergency fund.
  • Pay off high interest debts.
  • Meet your insurance needs.
  • Have a set investment allocation and monthly savings plan.
  • Have a Will and appropriate trust or powers of attorney.
  • Review the specifics and details around all of the above regularly.
  • Then, do not dwell on any of it.

Investor behavior expert Carl Richards says that as an advisor, his job is to “not be a defender of an outdated map, but a guide in a changing landscape.” On this journey, I am not suggesting we throw caution to the wind, but appreciate that at some time, not of our choosing, the landscape will inevitably change.  The point I want to hammer home is the same point I attempted to make to my daughter. Often, the downhills are the most fun part of the ride. Don’t take your foot off the pedals, be mindful of where your brakes are, keep your head faced in the direction you want to go, but maybe, for just a bit, after you have done all you can, coast down the hill and enjoy the wind in your face.

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