The Financial Success Equation

Whether you’ve been a client of TCI for 30 years or are beginning a financial planning journey, one of our fundamental principles is to educate people about investing. We believe education empowers investors to be confident in their financial plan and have a less stressful investment experience. So, I’d like to teach you an investing formula that TCI’s founder Bob Swift taught me–it’s something I think about every day:

Knowledge + Time + Behavior = Financial Success*

*-Our compliance department would not let me publish this blog without having me tell you that this formula does not guarantee anything. However, we believe following this formula tends to have a profoundly positive impact on your financial outcome.

Why share this formula now? Well, as we evolve to the next chapter of TCI the Advisors along your journey may change, but the principles we use to guide you remain the same until the data tells us we should do something different. So, let’s break down the formula and look at why this simple formula can be so powerful.

Knowledge

Having knowledge around money is being financially literate. At TCI we define financial literacy as understanding basic financial principles and being able to practice them in your daily life. Financial literacy does not mean having deep knowledge of investing, debt management, estate planning, etc. Your TCI team has a detailed understanding of these specifics so you don’t have to. We know that your knowledge is going to need to shift throughout your life. Early on in your career you may focus on paying down student debt but now your focus is figuring out how upcoming tuition payments for your child are going to fit into your plan.

Where you turn to acquire financial knowledge is the same as it used to be, but it is on a much larger scale. You don’t have to search too far to find hundreds of thousands of people offering financial advice. There are countless videos, blogs, social media accounts and podcasts offering opinions. Within these spaces there is minimal regulation and people are not held accountable for what they say even though this advice could have serious ramifications.

So, when you’re looking to expand your knowledge on a given topic be sure to be somewhat critical of where information is coming from and ask yourself some simple questions:

• What do these individuals receive out of sharing this information?
• Are they trying to sell you a product?
• Do they receive a commission if you sign up for something?

Another way to gain financial knowledge is to talk to people in and out of your circle. Seek peers who have gone through similar events and, of course, ask your Advisor, even if we aren’t scheduled to meet for a little while. This is what we love doing, and for many of us, it’s also our passion. We want you to be successful with your finances. We are going to use our knowledge to help you grow your own knowledge.

Time

This should come as no surprise to long-time readers: start your financial journey as early as possible. If you start your journey earlier you have more time to grow your assets, implement good behaviors towards money, and it allows for more changes to your plan along the way.

However, for those who have less time than others, there is still time and that’s important to remember. There may be less time and nuances available to you, but we’re always here to work with you to help you attain financial freedom.

Behavior

As we’ve learned, increasing your financial knowledge and giving yourself plenty of time are two important things you can do to increase your odds of financial success. Behavior simply refers to the actions you take with and towards your money to get yourself closer to accomplishing your financial goals. Behaviors can be physical actions or thoughts. Some examples of beneficial behaviors towards money include:

• Spending within your means
• Limiting greed and fear around market fluctuations
• Communicating changes that impact your plan with your Advisor
• Identifying how to fund what you’d like to accomplish in life
• Utilizing accounts with tax advantages

We all know that having money doesn’t necessarily make you financially secure. It helps, of course. However, no portfolio in the world can be protected from bad behaviors towards money. Furthermore, don’t be fooled into thinking healthy behaviors are strictly something young people should focus on. I’ve had countless conversation with people reinforcing the importance of not spending more than their plan permits.

Advisors look at your assets through a long-term lens because we need to make sure there is enough there to last your entire life. Bad behaviors around money can be more impactful to your plan than times of market uncertainty. We also understand that no plan is set in stone and things change. So, we rely on communication from you. What behaviors of yours are evolving? Are you eyeing a home remodel sooner than anticipated? Communicate these changes so we can analyze them and see how they’ll fit into your plan. As your financial partner we need to know what’s happening in your life so we can respond and adjust and maintain the best possible position to fulfill your financial goals.

Financial Success

We made it! Knowledge plus time plus behavior brings us to financial success.*

*-Again, not a guarantee.

What does financial success mean to you? As we’ve seen, it’s not as simple as a large bank account. The beauty of the formula is that while you’re working through it you can simultaneously work on determining what financial success means to you. If you need help, your TCI team is here to work on it with you. The beauty of financial success is that it can kind of be anything you want it to be.

One of the hardest parts is not letting comparison take your joy away. Financial success is going to look different for everyone, and we understand how hard it is not to look around and think someone else is more successful because they have this or that. We’ll help you focus on your goals. As your life changes and your goals change, we’re here to teach you the behaviors, give you the knowledge, and help you manage the time to get you to whatever financial success you have in mind.