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The Investment Coach

Opinion: Your 30-year WOOF plan

A recent Investment Coach column postulated that WOOF (Well Off Older Folk) would help to save the airlines by buying premium fares in first and business class. Having been cooped up during the pandemic, retirees and others blessed with time, money and energy are getting out there in style. How does one join the Loyal Order of WOOF?

You may be a tech wizard and strike it rich with a hot initial public offering (IPO). You may win the lottery or receive a big inheritance. But for most people, achieving financial independence is a long, determined, patience-inducing, hard-working, and disciplined slog. Say you recently turned 30 and you want to join the WOOF-pack at a “someday” targeted age. Consider the following actions.

Action: Step-up your earning power. Employers cannot find enough qualified people. That spells “opportunity.” Whether you are an employee or a business owner, the secret to long-running success is to recognize your inherent talents and move toward strength by adding skill and knowledge to bolster your value in your chosen role. If you’re not passionate about what you’re doing, you’ll bounce from activity to activity, job to job, chasing chimeras in pursuit of the next big thing. In your current role at work, what’s your path to growth? If you’re an entrepreneur, do you understand the precepts of “value acceleration,” so that your enterprise value grows over time? “Personal value acceleration” applies to your role as an employee, professional, a member of management, CEO, leader, etc.

Action: Managing work/life balance. In your pursuit of success, is your personal, physical and spiritual life in balance? Are you taking care of yourself and those who love you and depend on you? If not, you could be derailed by one or more of the 5 D’s ─ disability, death, divorce, disagreement, dissolution. Physical health, mental energy, and spiritual health are integral to true fiscal health.

Action: Create and maintain a current and dynamic financial life plan which incorporates “What if?” strategies relative to the 5 D’s and other hazards on the Road of Life. Risk management and living and testamentary estate planning are foundational. Your plan also incorporates thinking relative to earning, spending, saving, debt management, investment policy, asset allocation, etc. Are you and your significant other on the same page? If you’re a business owner, do you have a written Growth and Continuity Plan?

Action: Diversify your investments. Say you want to be financially independent by age 60 in 2051. You want to own things likely to appreciate over time in excess of inflation (a growing concern) and taxation (another concern). Stocks play a role, owning shares in growing businesses likely to maintain expanding long-term earnings and dividend policies that will precipitate rising stock prices. On Sept. 29, 1991, 30 years ago, the Dow Jones Industrial Average closed at 3,061.48. On Sept. 29, 2021, the Dow closed at an all-time high of 35,819.56. The S&P 500 index closed on 9/29/1991 at 391.48. On 9/29/2021, the S&P 500 closed at 4,605.38, also a record high. Over time we’ve seen rising bull market and falling bear market interludes impacted by recessions, war, political upheavals, rising and falling interest rates, varying inflationary pressures, changes in tax policy, uncertainty as to the future, etc. There’s always something to worry about if you choose to do so, but betting on progress in the long run has proven to be a winner.

You want to own tangible things that have the potential to outpace inflation, real estate, for example. You want to own your home free and clear, and ideally be overall debt free, by your target date for financial independence. You want ample cash reserves to get you through rough patches; financial firepower to allow timely purchases of undervalued assets, stocks included, during recessions and other downturns; money to make alternative investments and take advantage of opportunities, including perhaps, expanding or starting your own business. Later in life, as equity values grow you may wish to maintain a portfolio of municipal bonds or other relatively safe assets as a buffer, recognizing that bonds and cash do not hedge inflation.

Whenever pessimists or naysayers garner undue media attention, consider the growth that you’ve witnessed in the last thirty years. Ponder the advancements in technology, science, and medicine. Think about the tools and resources now at your command that didn’t exist in 1991. We’ve made advancements relative to climate change, and will continue to do so despite alarmists’ cries. Our air and water are far cleaner than they were three decades ago. Positive movement will not stop and creativity will continue to surprise us, rendering some things obsolete as new and better things appear. “Creative destruction” is unsettling for some, but it’s the engine of progress, a source of opportunity.

In short, keep the faith. Ignore naysayers. Bet on yourself and bet on America. Year 2051 isn’t that far away!

Lewis Walker, CFP®, is a life centered financial planning strategist with Capital Insight Group; 770-441-3553; lewis@lewwalker.com. Securities & advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis is a registered representative and investment adviser representative of SFA, otherwise unaffiliated with Capital Insight Group. He’s a Gallup Certified Clifton Strengths Coach and Certified Exit Planning Advisor.