WINSHIP
WEALTH
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2013 / Investing

Are You Investing Like Your Dad?


I recently had lunch with a friend and after catching up on things, I put my Marin County investment advisor hat on and asked him, “What keeps you up at night financially?” In a very somber tone, he replied, “I just want to make sure I don’t end up like my dad.” I found this to be somewhat depressing on two levels - first, the thought of my friend’s father suffering financially at a time when he should be enjoying his life; and, second, the idea that my friend’s primary benchmark for financial success is to avoid ending up like his father. Obviously, it has to be extremely distressing to watch your father live in dire financial straits. That would certainly keep me up at night as well. But, as I suggested to my friend, it’s difficult, if not impossible, to attain financial success if you don’t focus on your own ambition for a good life. We certainly want to learn from our parent’s mistakes, but if we don’t have a clear vision of what we truly want for ourselves, we could wind up making our own mistakes.



Are the money lessons of your parents harmful to your wealth?



It seems to me that this is a generational thing. My dad is the son of Great Depression-era parents, so he adopted a very risk-adverse posture in both his finances and in his business (he was a dentist). He was frugal and he invested conservatively. To avoid the financial troubles his parents experienced, he saved early and often, which served him very well. The problem is that, because he was so conservative in his business, he did little to grow it and, therefore, was chained to his dentist chair up until the day he finally retired.

As his son, with his own business, I could use the lessons of my father in one of two ways – I could follow his path, being conservative in my investments and my business; or I could do the opposite, and take more risks. Having my own vision of a good life in which I have no desire to be chained to a business until late in life, I chose the opposite. In this era, to invest too conservatively can be the death knell of long-term financial security. As the son of a very conservative dentist, I had to step outside my comfort zone. But, as a Marin County investment advisor, I’ve learned how to utilize risk in the stock market and in business to improve both portfolio returns and stability.

Ultimately, I had to follow my own course based on my own ambition for a good life and develop my own financial plan and investment strategy. Then I had to recognize how the inherited tendencies of my parents were affecting my financial decisions. I had to acknowledge that, while my parents did very well for themselves, it was a different era, with a much different investment environment.



How are your parents financial habits hurting or helping you?



Take few moments to list five things you learned from your parents that you feel have helped you make the right financial decisions and five things that may be detrimental to your finances:

RIGHT MOVES
1)
2)
3)
4)
5)

WRONG MOVES
1)
2)
3)
4)
5)

Now analyze each list in view of your own financial goals and vision for the future. Understand why the right moves learned from your parents are helpful to achieving your goals. Then determine why the wrong moves you inherited may be hurting your finances and develop a plan to change or eliminate them.




Image made available by Tracy O on Flickr through Creative Common Licenses.

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