March gets its name from the Roman God of war, Mars. Strange fact, but almost every war in which our country has been involved officially began in the month of March. My favorite part of March is that it signals we are getting much closer to spring, which means more moderate temperatures. I love the outdoors and it is far easier for me to enjoy the outdoors when the temperatures are warmer than winter.
With Saint Patrick’s Day fast approaching, it reminds me of the phrase “the luck of the Irish.” According to all the sources I could find, the origin of this saying is not certain. Looking back over the past centuries of the Irish people and their island country, their extended periods of oppression and famine certainly don’t point to great “luck” as it were. Nonetheless, many times people use that term as a form of “blind luck.” Not long ago, one of my colleagues and I were talking about this saying when it comes to investing.
Successful investing has nothing to do with “luck.” Successful investing is achieved through patience and prudent choices. There is no “perfect” investment. Investments are comprised of two main categories: owning and loaning.
Loaning is the most common form of investment. Cash, checking accounts, savings accounts, certificates of deposit, bonds – all are examples of loaning. Loaning is very important for all of us. It is often said that loaning never creates wealth. Yet loaning is an integral part of every investment portfolio. It is certainly an integral part of all our clients’ investment portfolios. Loaning represents much less volatility risk for our clients. Loaning also represents all the short-term money for our clients.
Owning a small business, real estate, stock in a publicly-traded company – are all examples of owning. Owning, in almost every instance, is a long-term investment. In our practice at Life Compass Financial, we have a rule that we never want to invest short-term money into long-term investments. This is speculating (I call it gambling). Speculation in investments is not illegal. It’s just not what we do in our practice. We focus on the goals, the big picture, of our clients. Owning doesn’t have to mean large risk. There are ways to lessen, or lower, the risks associated with owning. One key fundamental to lowering risk is by investing in quality. Another is through diversification. The old adage, “don’t put all your eggs in one basket,” is prudent when it comes to investing. Also, recognizing there is no perfect investment is very important for long-term investors attempting to create wealth and grow their money. Even the best of owning investments will fluctuate and lose value from time to time. Every business, and every owning investment, fluctuates in value over time. We don’t tend to see the price of real estate or a small, closely-held business, fluctuate in the short-term because the value isn’t readily accessible like that of a publicly-traded company – whose value is shown every business day in the press and on the internet. With no perfect investment, most successful prudent investors rely on quality and diversification and professional management to lessen the risk in their investments.
Even though I am of Irish heritage, I would never want to rely on “the luck of the Irish” in my investments. I urge you to not rely on luck at all. Happy Saint Patrick’s Day to all.
-by Ben Smith
Registered Principal, RJFS
313 East 10th Ave. • Bowling Green, KY 42101 • Phone: 270-846-2656
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.
Ben Smith Life Compass Financial is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc. Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Raymond James Financial Services Advisors, Inc.
