SLOW AND STEADY: THE PATH TO FINANCIAL SECURITY
As originally appeared in The Jerusalem Post on July 6, 2018.
The most successful men in the end are those whose success is the result of steady accretion.
-Alexander Graham Bell
In this week’s Torah portion of Pinchas, the leader who will replace Moses is revealed. Up to that revelation, I would postulate that the leading candidates to inherit the leadership position would either be one of the sons of Moses or Pinchas. One of the sons because often leadership is passed from father to son and Pinchas as it says, “Pinchas, son of Elazar, son of Aharon the Kohen, turned back my wrath from upon the Children of Israel, when he zealously avenged Me among them, so I did not consume the Children of Israel in My vengeance. Therefore say: Behold! I give him my covenant of peace.”(Bamidbar, 25:11-12)
Such a bold and heroic action would certainly put him in the running for leadership, and the nation would get behind him as they were saved from death by his zealousness. Imagine the surprise when Joshua is chosen to lead the nation. After all, he was just the servant of Moses. I once heard Rabbi Shalom Gold speak at a grandson’s Bar Mitzvah and he asked what quality did Joshua possess that merited his being chosen to lead. He answered that if you look at the juxtaposition of verses, immediately after his being chosen we have the section that deals with the daily offering in the Temple, the Tamid. One lamb was offered in the morning and the second was offered in the afternoon. He said it’s the day in day out commitment which is important in leadership, not a one-time heroic event.
Boring
Far too often I get a phone call from a client asking for a “hot” stock tip. Much research has shown that the key to portfolio growth is asset allocation, or how you break up your portfolio into various assets, and not stock picking. In fact, data shows that over 90% of all portfolio returns come from asset allocation. This means that stock picking has little impact on your investment returns.
Living within your means, saving and investing are the time-tested methods to achieve financial security. Slow and steady portfolio growth over the long-haul makes all the difference. Trying to find the one stock to put all your money into to try and hit a grand slam and become a millionaire isn’t a well thought out financial plan. I’ve written before about a man I know that during the go-go days of high tech in the late ‘90’s decided that he was going to put all his hard earned money into Nokia stock, and become a millionaire. Well, he made it to almost $800,000 and then the bubble burst, and Nokia started dropping fast and never managed to recover.
Hang in there
Another important factor in achieving financial security is the need for patience. Investors get spoiled when markets rise over an extended period of time, forgetting that the market can drop as well. Last week I met with a young woman who started to complain that she had made no money over the first half of the year. I explained that outside of technology stocks the market has been quite volatile this year, but hasn’t really gone anywhere. She didn’t like that and continued on saying that no matter what she should be making money. I reminded her that last year she had a near 20% return, so the fact that for the first 6 months of the year she is even is no big deal. Her account is doing just fine.
Think long-term
I may sound like a broken record but those who really keep their eye focused on the long-term, end up doing well financially. Sit down and define your goals and needs, and then invest with an allocation that will help you achieve those goals. Don’t get caught up in trying to time the stock market, instead buy good quality assets and hold them. What you should do is forget about short-term market gyrations and focus more on re-assessing your goals and needs from time to time.
Follow the lead of Joshua. Nothing spectacular; Just keep to the basics and you too can become financially secure.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.gpsinvestor.com or email aaron@lighthousecapital.co.il.
