The Future Will Be Better Than You Anticipate

What’s beyond your horizon?

My biggest takeaway from economics is that the past wasn’t as good as you remember, the present isn’t as bad as you think, and the future will be better than you anticipate.”

This is the start of a recent Motley Fool article by Morgan Housel, and I think, given the recent “excitement” in the market, it serves as a timely reminder.

Housel’s article continues with more sound ideas and concepts, however I take issue with one in particular.

His statement, “‘Save more money’ is some of the best financial advice you can give . . .” is true.

Up to a point.

For most Americans, who apparently can’t afford an unexpected $500 expense, by all means, save.

Then save some more.

However, for those of you who are decidedly “above average” and could afford a surprise $500 expense (or perhaps a lot more), there is a point of diminishing returns with savings.

I believe you can actually save too much!

For instance, what if you’re saving so much in order to have a comfortable and confident future that you’re unintentionally sacrificing your current lifestyle today?

What if you can’t afford to travel or do some things you’d otherwise love to do with your family and friends because you’re saving so much for the future?

While this might strike you as a first-world problem, my goal in working with my clients is to help them have a comfortable, confident future AND a great lifestyle along the way.

The two ARE NOT mutually exclusive.

Food for thought . . .

Another of Housel’s “few things” is, “Investing is an epic battle between your goals, your temperament, and the self-interest of middlemen. Problems are easier solved when you break them down into those three groups.”

I think this one maybe especially helpful to ponder these days.

With the recent drop in the investment markets, you can expect to hear — directly or indirectly — from salespeople peddling annuities.

As I’ve shared before, I’m not a fan of annuities in general.

Most are riddled with fees and are near-impossible to understand. For more, seethis Forbes article by Ryan Wibberley.

Annuities are so problematic, they’ve drawn the attention and ire of Senator Elizabeth Warren who released a report about the problems with annuities and how they’re sold to consumers.

Did you know, for example, that many of these annuities that promise market performance don’t include stock dividends when calculating your performance?

Nevertheless, some of these annuity insurance contracts have a deep emotional appeal when they promise “market performance with no downside risk.”

When you see the news and you just want the market to stop going down, annuities seem like a great alternative.

However, I would urge caution and an above-average level of skepticism on your part.

And as Senator Warren’s report highlights, you could be indirectly paying for your annuity salesperson’s Bahamas trip regardless of how you fare financially in the future.

OK, enough about annuities (for now). If you have questions or are being pitched an annuity and would like a 2nd opinion, give me a call.

Finally, in a volatile market environment like we’ve experienced recently, I think putting things in perspective is helpful. A little context, if you will.

For some additional context, I’d like to point your attention to this recent article by Michael Batnick. Specifically, see his “takeaways” in the article listed as 5 bullet points under the graphs.

Batnick’s article and the context it provides aren’t a cure-all for the emotional roller coaster that this market feels like, but hopefully it will help prevent you from making a long-term mistake based on a short-term decision.

This article was originally published on

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