3 Things My Client’s Taught Me About Investing

Throughout my years as a financial planner, I’ve had the pleasure of working with clients from every walk of life. I’ve worked with company executives, famous musicians, movie directors, doctors, lawyers, single parents, factory workers, new grads, you name it.

After years of working with clients, I’ve learned 3 things that have the biggest impact on a person’s ability to accumulate wealth regardless of their socioeconomic status:

1. In investing, your Emotional Intelligence (EQ) matters more than your Intelligence Quotient (IQ).
2. Doing the boring things well pays off in the long-run.
3. If you constantly measure yourself against others, you’ll never have enough. ?

EQ Matters more than IQ

I’ve watched lots of ‘smart’ people do dumb things with their money.

This is especially true when it comes to investing. Your biggest obstacle in building wealth over the long-term is yourself.

Some people just simply can’t get out of their own way.

When it comes investing it’s a relatively even playing field. The market doesn’t care if you have a PhD or a G.E.D.; it’ll chew you up and spit you out if you think you can outsmart it.

The quicker you learn this, the better investor you’ll be.

Consistency is hard but pays big dividends.

As of the date of this newsletter, Caitlyn Clark, a Guard for the University of Iowa Women’s Basketball team, is the all-time leader in points in college basketball.

Part of the reason she’s been able to rack up so many points is her efficiency at the foul line.

Clark has a career foul shot percentage of 85.8%.

For those who didn’t play basketball, practicing foul shots is one of the most monotonous parts of basketball. I’m sure the last thing she wanted to do after a hard practice was shoot 100 foul shots. Yet for Clark, her 783 career foul shots make up almost 21% of her total points. Yes, she can hit a 3-pointer from the center court logo, but the real reason she’s been so successful is her ability to cash in at the foul line.

Simply put, she does the boring stuff better than anyone else and it’s paid off tremendously.

The same goes for investing. If you invest $500/month into a low-cost index fund earning 7%/year on average, after the first year, you’re only going to have $6,196.

Nothing to write home about.

But, if you invest $500/month and make 7%/year on average over 30 years, that $500/month investment turns into $609,985.

That’s a real number.

There’s nothing flashy about it which makes it so hard to stick with over time. But just like Clark’s foul shots, if you do it consistently over time, you’ll reap huge dividends. ?

If you constantly measure yourself against others, you’ll never have enough. ?

As an advisor, I often get the question, “how am I doing compared to other people like me?” This can be such a dangerous and frankly impossible question to answer.

Unlike basketball, with investing there’s no opponent. You’re playing against yourself. When it comes to having ‘enough’, it’s a moving goal post that’s different for everyone.

The biggest piece of advice I can give you is to focus on what you can control. Focusing on what others have isn’t going to do anything to improve your personal finances.

If you measure wealth by the size of your portfolio, you’re never going to be happy.

Why?

Wealth isn’t what you have in your bank account. Wealth is having good health, having strong relationships with your family, and being able to do the things that you want to do when you want to do them.

Disclosures:

The information provided in this article is for educational purposes only. It is not intended as financial advice, and no content within should be construed as such. The content is based on general financial principles and concepts, and individual financial situations may vary. Readers are encouraged to consult with a qualified financial, legal, tax and/or any other advisor that they may have for personalized advice regarding their specific financial circumstances. Any action taken by readers based on the information presented in this article is at their own discretion and risk. The author and publisher of this article make no representations or warranties with respect to the accuracy, applicability, or completeness of the information provided. This article does not endorse or promote any specific financial products, services, or companies. It is the responsibility of readers to conduct their own research and due diligence before making any financial decisions.

About The Author

Caleb Pepperday, CFP?, ChFC? provides Fee-Only?Financial Planning?and Investment Management Services for medical professionals. Advanced Practice Planning, LLC is based in Missoula, MT, but primarily works with clients in a virtual capacity nationwide. As a CERTIFIED FINANCIAL PLANNER? and fiduciary, Caleb Pepperday works to create financial plans for medical professionals with their best interest in mind. As a Fee-Only financial planner, Caleb Pepperday is only compensated through the investment management or financial planning fees that you pay him directly and never earns a commission. Caleb Pepperday primarily focuses on working with mid-career Physician Assistants/Physician Associates (PA-C), Certified Registered Nurse Practitioners (CRNP), and Certified Registered Nurse Anesthetists (CRNA), but has clients in a variety of professions (particularly relating to the spouses of Advanced Practice Providers).

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