A New Perspective on Risk Tolerance

When you are making an investment decision, do you intentionally weigh the potential risks and rewards?  Is weighing that balance more of a rational or emotional process for you?  In other words, do you tend to rely more on facts or on feelings?

For investors, “risk” is defined as the chance to experience loss versus the chance to experience a gain.  At one end of the risk tolerance continuum are those individuals who are averse to risk.  They focus their thinking on the “loss” part of the equation.  For them, risk is anxiety producing and a factor to be avoided.  They want to stick with the known and predictable.  In addition, those who are risk averse value financial stability above all else.  Therefore, they are willing to sacrifice higher returns to achieve that sense of guarantee. (more…)

Kids Need Money Mentors

With the level of consumer debt skyrocketing and the cost of housing, education, and health care increasing at double digit rates, younger generations are facing unprecedented challenges to achieving economic security and financial independence.  Therefore, helping our youth to learn effective money management skills, and to adopt good financial habits and attitudes, is more important than ever.

So what can you do if you are worried about the financial future of your children, grandchildren, nieces, and nephews?  The place to start is by considering the positive influence you can have in shaping their financial well-being.  Next, think about and choose specific ways that you can be a proactive Money Mentor in their lives.  Here are suggestions and resources to get you started: (more…)

Finding Meaning in the Second Half of Life

Individuals in mid-life and beyond are increasingly viewing retirement not as a time to relax, but as a time to explore their potential.  It was Abraham Maslow, a psychologist, who gave us the term, “self actualization.”  He called it man’s desire for fulfillment, “to become everything that one is capable of becoming.”

For many, the path to self-actualization is through their “work”—which should be defined as the productive activities, paid or unpaid, that gives their lives meaning and a sense of purpose.  Helen Harkness wrote that linking work to the need for meaning has been a natural evolution: (more…)

A Shift in Priorities

A shift in prioritiesThe inaugural American Dream Study, conducted in 2007, revealed an insatiable hunger for more and better material possessions.  In addition, the bar was continually rising for what was considered “basic necessities.”  However, across all social strata, the economic crisis has been a loud wake up call.

Respondents to the 2009 version of the study reported that they are eating at home more often, shopping more at big box discount stores, spending less on movies, and moving away from brand-name products to generics (www.metlife.com).  And, unlike previous downturns, no one seems to be immune. (more…)

Retirement Confidence Survey

The Retirement Confidence Survey (RCS) is the longest-running annual retirement survey of its kind in the United States.  It gauges the views, experiences, attitudes, and expectations of Americans regarding retirement preparation and related issues.

The 2012 RCS is the 22nd annual wave of this project, making it possible to track retirement planning behaviors and concerns over time.  Of particular interest in recent years is the affect of the slow economic recovery on the level of confidence Americans have regarding their long-term financial outlook. (more…)

The Self-Directed Life

“We encourage you to set the bar high, no matter what you’re aiming for in life.”

Marc Eisenson, Gerri Detweiler
Nancy Castleman
Invest in Yourself:
Six Secrets to a Rich Life

Many of us spend our lives trying to please others or pursuing goals that others have set for us.  In contrast, the authors of Invest in Yourself advocate the self-designed life, “where you invest your time and energy getting what you want and doing what you believe in—not wasting them on things you don’t really want, but think you should have.”

The first step to take, in changing the direction your life, is to clarify your values and priorities.  That is because identifying and articulating what is most important to you will increase your self-understanding and strengthen your sense of autonomy.  An excellent resource to help you in this process is Values Clarification by Sidney Simon, Leland Howe, and Howard Kirschenbaum.  This book is described as “the classic guide to discovering your truest feelings, beliefs, and goals.” (more…)

Retirement: The Bigger Picture

When a person sets goals that are especially meaningful, he or she experiences a sense of mission.  A mission is always in tune with one’s values and interests and gives opportunity for those to be expressed in many ways.  A sense of mission in retirement adds an essence and quality of life, the value of which is beyond measure.

As you take steps to design your life in retirement, you may discover that your thoughts turn to deeper issues.  Many consider retirement to be a time to explore their potential. Though a nebulous concept, for some this may mean “fulfilling my purpose,” “finding and expressing my uniqueness,” “making a difference,” “having a mission,” or “leaving a legacy.”  Individuals often respond to this desire for a higher purpose in the following ways:  creativity, contribution, generativity, and spirituality. (more…)

Money Myths and Messages

It is important to keep in mind that cultural messages have a profound influence on our money beliefs.  Intellectually we can disagree, but subconsciously these messages can affect how we feel about money.  Therefore, true financial freedom is more than having a lot of money; it is being free of money myths and notions that influence our money attitudes and behaviors.

For example, there is a lot of truth to the old adage, “Money can’t buy happiness.” However, what money can “buy” is options—more alternatives to choose from as you design the life you want to live—now and in the future. (more…)

Successful Aging

As we grow older, we also have the opportunity to grow as individuals and to develop relationships that are more “grown-up.”  In Creative Aging, author Nancy Bost Millner wrote, “The task of consciously aging people is to stop projecting—to stop demanding that the weather, the children, and the universe do what they want them to do.”  She also noted that the self-aware individual will come to realize that expecting another person to complete them, take care of them, and make them happy is not only unrealistic, but also unfair. (more…)

Balance and Pupose

To balance one’s life is to bring all areas of life into a state of equilibrium or stability. Focusing on only one or two areas of life can work for awhile (and is sometimes necessary), but eventually life will begin to feel out of kilter and then start spinning out of control.

For example, individuals may have this experience when their careers have taken precedence at the expense of other areas of life such as relationships, leisure, or health. Hopefully, this imbalance can be recognized and corrected before important relationships disintegrate, leisure becomes a forgotten art, and health is compromised. (more…)