Tools of the Retirement Trade

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My dad is an architect. Ever since I was a kid, I can remember moments where my dad would remind me, “It’s a poor craftsman that blames his tools son.” As a kid, I really had no idea what that meant, except that I should stop complaining. Now, as an adult, I think its one of the greatest lessons I ever learned.

Too often families complain about their investments. They don’t like this, they don’t like that, etc. In addition to this, their eyes glaze over when I begin to speak about investments. They tell me that they trust me (which I appreciate). In my experience, when a new family says, “We trust you,” it translates, “This is boring and we’ve had enough.” I understand they don’t want to become investment guru’s, but who can’t afford to ignore this information? Losses are looming in the future; we don’t know when, but we need to be prepared. How do we prepare for investment losses? Knowledge.

“How do we prepare for investment losses? Knowledge.”

How does investment complacency and tools of craftsmen relate? Remember what I tended to do when I didn’t use tools correctly? I complained.

In my father’s case, those tools were related to construction. I feel the average person relates well to construction. Construction is tangible. Forgive me while I run off on a tangible tangent.

Imagine for a moment that I asked you to build a house. Let’s just assume you had the skill set to accomplish the task. What tools would you use? You would use an array of tools! What if I gave you a hammer? A hammer is a great tool! Nails need to be driven! We are working with all kinds of wood and the simplest way to adjoin wood is nails. Clearly, everyone needs a hammer in construction, but what if I ONLY gave you a hammer? How would you feel about that hammer?

“Hammers are bad,” they would indignantly retort.”

Let’s see … if you needed to do any foundation work, you would need to dig. OK, you could do some digging with that claw on the back of the hammer, but it probably could be done more efficiently. We will probably need to do some framing. The hammer will drive those nails well, but what about cutting wood? Good Heavens, people would begin to hate hammers! They would blame the hammers for being awful tools; they’d swear to never, ever pick up a hammer again. Why? “Hammers are bad,” they would indignantly retort.

Herein lies the problem with investing. The hammer wasn’t the problem. The problem was the person who only gave you a hammer. Many people I meet, only have hammers. Maybe they have a hammer and a saw. Rarely do they have the array/diverse set of tools needed to accomplish their goals. Due to this problem, people begin to clamor, “Annuities are from the devil,” “Mutual funds are evil,” or “xyz is wicked!” Tools are neither good or bad. Tools are just tools. Tools can be applied well or poorly. The poor tools are often assigned the blame that is due a craftsman.

“The hammer wasn’t the problem.”

Don’t be angry at your tools, make sure they were built for the job they are trying to accomplish. If you are trying to drive a nail with an annuity, there is going to be pain and disappointment involved.

Tune in next time as we discuss the uses of different tools.

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