Today the world seems to be getting more and more chaotic. Wars and rumors of wars, violent weather in diverse places, and even the global financial market meltdowns are sure signs of trouble beyond our control. In the midst of all of this chaos somehow we are supposed to manage our lives and continue to maintain a level of sanity. The world is full of variables that challenge our ability to stay focused on accomplishing the tasks that have been set before us.
The process of managing your life begins the day you are born and is not concluded until the day you pass away. Developing a life plan provides you with the ability to manage life. However, developing a life plan is not as simple as it sounds. Just consider the number of variables that have direct and indirect influence over your life. As you begin the process of developing your life plan, you will be distracted, pressured, and caught up in the chaos of life. But you have to step away from the chaos and focus on developing your life plan. It is that important.
There are five general phases of every person’s life: Discovering, Establishing, Accumulating, Distributing, and Bequeathing. Each of these phases has unique characteristics that will shape the framework of your life plan. Most do not consider the need for a life plan until they are well into the accumulating phase. After they have begun to accumulate wealth, position, status or a number of other phase markers, they realize the need for a more structured way of navigating life.
Unfortunately, few people experience strong mentoring relationships with the key people in their lives who model solid foundational principles. The results are generations of adults who have more of a herd mentality than an entrepreneurial mentality. The difference is found in having to follow the crowd or thinking from a position of self-sufficiency. The earlier that young people are introduced to the idea of having a written life plan, the greater their potential for growth becomes.
The five foundational elements of life (and your life plan) need to include a value system (what you esteem in high regard), a belief system (what or who do you trust in), a behavioral system (what are the drivers behind how you act and react to the world), a logic system (what filters do you use in acquiring and disseminating information), and a principle system (where do you draw the line). These five foundational elements are all developed from a very early age through experiences.
So let’s quickly look at the five phases of life for the purpose of this series of developing a life plan. The first phase is discovering. From birth until seventeen years of age, we spend an inordinate amount of time absorbing information. We really haven’t begun the process of organizing, valuing, and discarding the vast amounts of information that we are processing in this phase. Needless to say, the five foundational elements are being formed through this process of information overload.
When children cannot make sense of all of the information and experiences being thrown at them, there is great potential for the five foundational elements to become corrupted. This early corruption causes many to reject the right things, accept the wrong things, and lack the ability to know the difference. For better or for worse, children eventually make it through the discovering phase and move into the establishing phase. From about eighteen years of age until about twenty-nine, the young adult is focused on staking their claim in life.
It is in this phase where the young adult begins to establish his place in the world. The career path, the social-economic status, and the political and world view are established. This is also the phase where everything learned in the discovery phase is tested and tried to see what you can believe in and what needs to be discarded. Unfortunately, some things that are discarded are of value and other things that are kept are of little to no value. This is a time of measuring by pleasure rather than logic.
If the five foundational elements are strong, this phase usually results in positive outcomes and experiences. If the five foundational elements are weak, the results can be confusion and a lack of moral and functional judgment. The discovering phase has progressive and permanent affects on the establishing phase. Although most of the affects are not immediate, the progress of the affects will be amplified by the level of stress to which you are exposed. The greater the stress, the more immediate and elevated the effects will be. Having a life plan positions you to be able to deal with and overcome these effects.
What is instilled in the discovering phase will be manifested in the establishing phase and it will be realized in the accumulating phase. The accumulating phase generally falls between the ages of thirty to about sixty-five. The focus of this phase is to gather wealth, possessions and knowledge. If you purchased a house in the establishing phase you need a bigger one in the accumulating stage. If you made $40,000 in the establishing phase you will be looking for promotions and raises to exceed your previous income levels. This whole phase is about building up your resources through accumulating.
A life plan developed early will pay big dividends in the accumulating phase. A life plan established through necessity will assist in the accumulating phase. But a life plan delayed until this phase will need to be aggressively executed to provide lasting benefits. It can be argued that those who wait to put a life plan into motion until the accumulating phase are predictably less likely to benefit.
The five foundational elements of life will have major consequences in the accumulating phase. If your value system is weak, your belief system is nonexistent, your behavioral system self-centered, your logic system is fraught with fallacious arguments, and your principle system is based on self-aggrandizement, then it is likely that the accumulating phase will be plagued with anxiety and stress.
By discovering what establishes your personal foundation and acknowledging the weight that those drivers produce on your life, you can develop a life plan that allows you to adapt, adjust and overcome the residual effects of poor guidance, dysfunctional modeling, or the lack of mentoring. It is not always easy. It is not always without costs. But it is worth it to free you from the influences of the past.
Between accumulating and the last phase of life, there is distributing. The distributing phase is where you begin to share all of the wealth, knowledge, and experience that you have accumulated over your life. This phase encompasses the time from age sixty-six until your passing. By now you have lived most of your life in the income producing years. Income should be understood as any source of wealth or gain from life experiences, including financial, intellectual, emotional, and spiritual. All gain is a form of wealth.
Sad is the man who only has his immediate family show up at his funeral. Even sadder is the man who has chosen to leave behind only a coffin, a headstone, and little else. In the distributing phase there is a wealth of wisdom, knowledge, and encouragement to be shared. Even if you are in the distributing phase and did not have strong foundational elements throughout your life, you can still make the decision to learn what you have learned throughout your life and choose to begin to share it. Wealth is not squandered until you are no longer here to share it.
When you pass from this life to the next, your life phases continue even though you do not. What you leave behind is as important as what you gave while you were here. In the bequeathing phase your legacy continues to impact the next generation. It is the full circle effect. Your legacy becomes the next generation’s discovery phase. It is the wisdom, knowledge, and resources that you leave behind that have either a positive or negative impact on your decedents. Leaving behind a small amount of financial resources with the wisdom and knowledge of how to handle those resources is far better than leaving behind great wealth without wisdom and knowledge.
A life plan is about paying it forward. How you manage your life can have a dramatic impact on not only your immediate sphere of influence, but the sphere of influence of so many who come behind you. The lessons that you learn in this process can be passed on as wisdom, experience, and knowledge. These are the pillars of the five foundational elements of a strong character. One cannot be expected to make sound decisions without first acquiring the wisdom, knowledge, and experience necessary to do so.
There is a phrase in the Old Testament that states, “Where there is no vision, the people perish:” (Proverbs 29:18). It is a simple concept. If you do not have an ultimate target for your life, your life will be defined by a lack of direction, a lack of accomplishment, and a lack of meaning. So what is a life vision anyway? A life vision is a statement that captures the essence of your existence. When you stand at the end of your life and look back, you can say with absolute certainty, “I lived my life in such a way that I was true to the very essence of who I was meant to be.”
A vision can be written for many aspects of your life. For instance, I have four vision statements. I have my personal vision statement, a family vision statement, a business vision statement, and a corporate vision statement. Each statement is true to who I am, yet addresses my existence within these four areas of my life. These statements keep me focused on the essence of who I am within the dynamics of my daily experiences.
There are some mechanics to writing a vision statement that will inspire you to live everyday focused on being the person reflected in the statement. I believe and advocate that you write the vision statement in the past tense. This technique causes you to evaluate your life by asking the question: “Am I behaving in such a way that I am accomplishing my vision every day?” Let me give you an example.
My corporate vision statement is:
To have been a stalwart agent of sustainable change, having built pathways of success that have positively impacted the operational functionality on the corporate environment with direction, growth, and opportunity based on improving the effectiveness and efficiency of processes and procedures.
Notice the past tense dynamics of that statement; “To have been”. So I am standing at the end of my life, looking back, and asking myself the question, “Did my life stand for what was the essence of who I am?” As I live out my vision, I will ask myself on a daily basis (using the aforementioned statement as an example). Was I a stalwart agent of sustainable change? Did I build pathways of success? Did those pathways have a positive impact on the operational functionality of the corporate environment? Did those pathways provide direction, growth, and opportunity for improving the effectiveness and efficiency of processes and procedures?
The point of a vision statement is to live out the dynamics of that statement everyday. Since this is my corporate vision statement, I look to exercise my gifts, talent, skills and abilities, and my acquired knowledge to be that stalwart agent of sustainable change in my corporate experiences. That does not mean that every day presents opportunities to live out my corporate vision statement. However, when opportunities present themselves, I will activate my gifts, talent, skills and abilities, and my acquired knowledge to be that stalwart agent of sustainable change.
As I work with individuals, I encourage them to develop a personal vision statement. It is a goal to be a good father. It is a vision to have left a legacy to the next generation. It is a goal to get that corner office with the mahogany desk, but it is a vision to create a philanthropic organization that impacts the lives of many long after you have passed away. A vision has the ability to outlive you. I have worked for several companies where, even after I had left the organization, the policies and procedures I established were still being used.
A vision helps to focus your efforts, everyday, towards those things that you have identified as being important to you. Once you have developed a personal vision statement, you can develop a family, corporate, or business vision statement depending on the dynamics of your life. As I have mentioned, I have four vision statements. Each one is specific to a different dimension of my life, yet all of them are true to the essence of my life. When you begin to live your life according to a vision, you will find that you will not perish. Those who are left unguided are apt to go astray. Whether they are lead astray by others or they drift astray by aimless wandering, without a vision the people perish.
Maybe you have never considered writing a personal vision statement. Maybe you have tried and found it too difficult. I can tell you that if you write a personal vision statement in a few short minutes, you have not written a personal vision statement. It takes time to drill down on the essence of your life. That essence being, who you are, what you believe in, and for what you desire your legacy to be. Only after many hours of introspection can you begin to formulate a vision statement.
In my first release, Planned Excellence: How to Achieve Greatness through Strategic Planning, I provided some intellectual exercises to help you write a vision statement. These exercises are a series of questions designed to focus you on the dynamics of the essential you. Questions such as, “What three things must you do every day to feel successful?” and “What are the five things you value most?” These are simple questions with profound impact.
So what would it take for you to begin this process? If you were stuck in an elevator with God, and He asked you, “Who are you, what do you believe in, and for what do you desire your legacy to be?” What would you say? Could you, in a simple sentence, answer those questions? If you can’t, but would like to be able to, I can help you begin the process of capturing the essence of who you are, what you stand for, and what you desire your legacy to be.
Whether you have a defined target to shoot for or not, you will leave a legacy. When you stand at the end of your life and look back, what are you going to see? Do you have an ultimate target for your life, or will your life be defined by a lack of direction, a lack of accomplishment, and a lack of meaning? If you do not define yourself and the legacy you desire to leave, the world will. Start every day with a reason to impact the world around you in a positive and productive way. To get started on your life vision visit http://kenrupert.com and consider employing the accountability and expertise of a gifted life coach.
Investing is an interesting sport. As in sports, the investor needs to develop and execute a well thought out offensive and defensive game plan. Professional sports teams study film to understand and learn the behaviors of their opponents. The investor needs to study the market to understand and learn the behaviors of the market from an industry and sector perspective. This will help the investor to make the right moves towards success. The following 13 tips are provided to help the novice investor develop a solid investment strategy.
Buy your way into the market – When you have completed your research and have made the emotional commitment to purchase a stock, mutual fund, or other investment vehicle, set a target, set a time frame, and execute with endurance. Do not buy the targeted number of shares all at once. Dollar cost average into the market by making a number of small purchases over a given amount of time. If you set your target at 500 shares of a stock, take time to purchase 100 shares at different intervals. Trading fees should be calculated into the cost of your purchases and you should think of these fees as the cost of doing business. Another way to maximize this tip is to buy a set number of shares of a dividend paying stock. Reinvest the dividends into the stock and accumulate shares up to your pre-determined target. This is a slower way of using the dollar cost averaging method, however, you will not incur the brokerage fees associated with making a direct trade.
Be willing to exit quickly – When an investment goes south, be willing to step out quickly and all at once. Stocks that are moving contrary to the market (i.e. the stock is going down while the market is going up) can trap you in an emotional dilemma. The best response to a diving stock is a logical decision. In order to achieve this logical state, you should set a price-dive percentage and place a stop loss order on the more risk-prone stocks. If you decide that a $30 stock that falls by 6% is worth selling, then you would place a trailing stop loss order at $28.20 per share. This will preserve a majority of the principle and reduce the potential loss of greater than 6%. You will want this trigger point to be set at least 6% since some dividend paying stocks have a tendency to drop in price after they go ex-dividend. A trailing stop loss order acts favorably when your stock is advancing.
Learn to utilize the entire trading toolkit available – Learn and understand the types of orders that can be used to enter the market low and exit the market high. A limit buy order allows you to set the price you are willing to pay to enter the market. Limit sell orders can be used to set the price at which you are willing to sell. A stop loss order protects your gains by selling your stock at a predetermined price as the stock falls in value. A trailing stop loss order will follow your stock up in price but will preserve your gains as the stock declines past a predetermined price. Knowing how to use these tools can help you get in and out of the market on your terms.
Expect the unexpected – Plan for the best case scenarios but never forget the worse case potentials. The market goes up and the market goes down. If you are able to keep that in mind, you will have won most of the battle. Expect bad earnings reports. Expect sectors and industries to fall out of favor. Expect the unrest and chaos of other parts of the world to impact your wallet and portfolio. Expect that what was true today will not necessarily be true tomorrow. Are you getting the point? The market’s evil step-brother is named Murphy. And when you expect him to show up he has a tendency not to disappoint. The best weapon against the unexpected is plan A, plan B, plan C, etc… Have an emergency fund for your emergency fund and have an alpha plan and an omega plan.
Emotional investing is a sign of lazy thinking – In all cases you need to overcome your emotional response to a market dip and a market rise. Getting too low or too high on market moves will present problems. Your intellect must be superior to your emotions. You will, no doubt, experience emotional impulses to sell on market dips and to buy on market rises. The best way to over-ride your emotional impulses is to devise a logical investment strategy and remain true to the execution of that plan. Leave no stone unturned when devising a strategy and leave every stone in place when executing that strategy.
Be willing to pay for information from trusted sources – Free advice can be a warning sign of an agenda. Be willing to pay for a service that empowers you. The traditional financial planning industry offers to take your financial resources and put it in investments that will perform well. They seemingly do this for free since you do not have to write a check to pay your planner. That is because their commission is paid by the loads that you pay to invest in certain funds. You never see the exchange of money but it is there. And when the funds do poorly, the financial planner will be reluctant to move you because his commission is based on the load you pay each time you invest in those funds. A fee based financial strategist will take the time to listen and devise a strategy that will align your investment strategy with your goals. You will learn from a fee based strategist because you retain the power over your money. Fee based strategists do not base their preferences on the wealth of a client. They base their preferences on what is best for the client because they know that a satisfied client will continue to employ their services.
Be open-minded to different options – There is no one strategy that works for everyone. If there were, we would all be wealthy. An older couple with several million in retirement savings will be in different investment options than a thirty-something trying to crawl out from under an upside down mortgage and the debt associated with fast living. And certainly a family of a special needs child will have different motivators to build and preserve wealth. The key is to not get trapped into thinking that because an admired financial superstar teaches to do something a certain way, that you also need to do it that way. Your decisions concerning investing should be structured to your specific needs and goals. If you do not have a million dollars, you cannot invest like a millionaire. You have to shape your strategies to fit your realities.
Wisely divide your investment dollars – I have heard some financial teachers talk about only committing 10% of your investment capital towards single stocks while keeping the rest in mutual funds. Warren Buffett suggests researching a stock and once you decide to buy, buy as much of the stock as you can afford. As much as I can appreciate these approaches, I do not necessarily subscribe to them in their entirety. What I would caution a client against is being too heavy in one stock. The more resources you can spread out across the different sectors and industries the more diversification you can create within your investment accounts. Here you need to set parameters such as no more than 7% of your overall investment dollars committed towards a single stock. Therefore, if you have $163,294 invested you would not have over $11,430 invested in any single stock. You have the power to set these parameters as long as you retain the power over your money (see #6). However, keep in mind that just as you have the power to set these parameters, you also have the power to ignore them. That is why this rule states to WISELY divide your investment dollars.
Keep cash to take advantage of opportunities – Keeping a small percentage of cash in your investment accounts provides you with the flexibility to take advantage of other opportunities that might present themselves from time to time. Sometimes a stock split, an IPO, or a conversion of a common stock to a REIT will provide you an opportunity to increase your return. You might also look for the arbitrage created through mergers and acquisitions. However, if you do not have a small cash reserve, you will not have the available funds with which to purchase enough shares to make your efforts worthwhile.
Stay away from special dividends – When a stock declares a special dividend do not be tempted to purchase that stock to capture the larger than normal dividend. Keep in mind that when a stock goes ex-dividend, the stock price will drop by the value of that dividend. Most stocks that offer a special dividend rarely regain the Cum-Dividend price (at least in the short to mid range time frame). This means that you have tied your money up in a stock that you will have to ride out other market ups and downs waiting for the stock to return to the cum-dividend price. Stick to Monthly or Quarterly dividend payers. In the event you get trapped holding a quarterly dividend paying stock, at least you can count on a dividend every three months until you see a gain that encourages you to sell out.
Learn to see the opportunity beyond the risk – Trading in stock carries a certain level of risk inherent to market fluctuations. Sometimes seeing opportunity takes a little more effort because of all of the noise of risk. Risk can be like a marshal amplifier hooked up to a Ted Nugent guitar solo. It can distract you even after it has stopped because of the ringing in your ears. It is also like a strobe light pointed directly at your eyes. After the flash stops going off, you have to wait for your eyes to get readjusted. But just as the secret of the strobe light is to not look directly at it, in order to see opportunity beyond risk you have to learn to look around the risk and identify potential opportunities. Investments are never without risk. However, taking the risk gives you the greatest potential for increasing your net worth and ultimately achieving the goals that you have set for yourself.
Get to know and understand the dividend pattern of certain stocks – Doing this allows you to purchase certain stocks prior to the declaration date. Purchasing a stock before it declares its next dividend allows you to ride the wave as demand for that stock increases and the price responds appropriately. You have to be careful to execute on both of these admonitions: Get to know certain stocks and get to understand their patterns. Some stocks pay annual dividends that can be quite attractive. Knowing when these stocks declare can allow you to purchase at a time that is advantageous for you. Sometimes you can capture a larger capital gain than dividend. The key is to study a small number of stocks that exhibit a historical pattern that can be manipulated to your advantage.
You cannot time the market – but you can time the dividend – Although there might be better entry and exit times during the course of the trading day, week, or month, it is not likely that timing the market is always attainable. Therefore, it is important to recognize that timing dividends is a whole lot easier. With just a little market knowledge, an investor can know when dividend paying companies have declared their record and dividend payout dates. This knowledge allows the investor to buy stocks that are poised to payout substantial dividends. It also allows an investor to know when to sell stocks. Start by looking for companies that have a history of consistent dividends. In many cases, finding a company that has consistently high dividends is preferred since the goal is to maximize profit. After identifying the company you are interested in, just remember the alphabet. B before E and O on R! B before E means BUY before the EX-DIVIDEND DAY. O on R means OWN on the RECORD DATE. This ensures that the investor captures the dividend. Ex-dividend dates tend to be two days before the record dates. Buying one day before the ex-dividend date endures ownership on the record date.
Before you develop an investment strategy, make sure that you have a fully funded emergency fund with at least three to six months of expenses and no outstanding debt (except your mortgage). If you have not established this level of financial stability, visit http://kenrupert.com and learn how I can help you achieve this goal. If you are interested in having a personal success life coach please contact me for a free consultation by e-mailing me at firstname.lastname@example.org.
The mission of The Vita-Copia Group is to build pathways of success that change the dynamics of “the game” through the purposeful and strategic manipulation of the given economic, social, and political environment so that each individual can achieve his or her own personal goals, produce his or her own desired results, and maximize his or her own full potential as designed by God.
Disclaimer: Always check with your financial advisor before making investments. Never invest in a company until you understand how that company generates cash and is managed. The aforementioned tips are not advice to invest in specific types of investments. The information provided is designed to increase your knowledge and encourage you to research the veritable plethora of investment opportunities before investing.
Recently I was asked if I believed that an employee becomes more productive when he works longer hours. My initial thought recalled a time when I worked for a union shop so many years ago. An interesting dynamic happened as the number of overtime hours increased. As the worker’s hours increased, the productivity of that worker dropped. When pay increased from regular pay to time and a half and eventually to double time, the amount of work that was produced significantly fell.
This is a catch-22 type question. If an employee answers in the affirmative, it could mean more work or higher expectations for the employee. If the employee answers in the negative, it could mean the employee would be looking for a new job. In economics there is a law that states “marginal output decreases as the amount of a single factor of input increases.” This is known as the law of diminishing returns and it is as real in life as it is in economics. This law is clearly illustrated in the above example.
Although the focus of my example is about time, in a real way, time is money. However, with time, you have to learn that you cannot control it, you have to manage it. Time is going to pass whether you want it to or not. Time itself does not move faster or slower based on your age (although it might seem like it), but it does move. And if you are not managing your time, it will slip away from you. When I work with clients, I insist that the client develops two distinct budgets. Certainly there needs to be a financial budget. One should have some level of knowledge on where his or her financial resources come from and where they go.
But there also needs to be a time budget. Each individual only has 168 hours in a week. Just 24 hours a day to accomplish every task of which the individual has been charged. I have developed two interdependent tools that assist an individual with time management. The first tool captures the hours associated with major categories specific to that individual’s life. For example, how much sleep he or she gets each night, how much time is spent commuting to and from work, or how much time is taken up by the small projects or children’s practices?
From there the individual will create an hour by hour time inventory log. These two tools are similar in function to a monthly financial allocation plan and a weekly cash-flow plan. The category tool looks at the weekly time budget and the time inventory log tracks the hour by hour activities. The former focuses on the “what” the individual does and the latter focuses on the “when.”
What I have found is that when an individual manages his or her time in a budget format, that individual has a greater sense of purpose. That individual has the ability to say no to things that fall outside of his or her time budget. The productivity of that person increases exponentially. It is not about working more, it is about managing time properly and accomplishing more in the given time constraint. Working more does not produce greater levels of productivity. It saps your energy and causes an imbalance in the work - life continuum.
Considering the following assumptions, the average person has very limited time resources each day.
Sleep 7.5 hrs Pre-work activities 0.5 hrs
Commute to work 1.0 hrs Morning Work 4.0 hrs
Lunch 0.5 hrs Afternoon work 4.0 hrs
Commute home 1.25 hrs Dinner 1.0 hrs
If this is an average day, the individual has about 4 hours and 15 minutes left in his or her day to squeeze in parenting, relaxing, and attending social, community, or religious functions. Depending on your lifestyle and your daily requirements, such as giving the children bathes, helping with homework, or exercising, you will learn that you have very limited time resources. Most of the time resources that are available to any individual are found on the weekends. My point is that given the busyness of life, there is a great need for a time budget.
Creating a time budget is essential to properly managing your commitments, but it is also vitally important to creating the space in your life. Just as you can find adjustments in your financial budget to pay down debt, save, or invest, you can find adjustments in your time budget to spend time relaxing or serving others.
An acquaintance of mine made the comment that he wanted to be able to do more in his church but he never seemed to have the time. I could see from my perspective that he was over-committed. Unfortunately, he felt so overwhelmed that he could not figure out where to begin to make sustainable changes. A time budget can help shed light on the areas where chrono-fatigue is happening.
If you are wondering about how to develop a simple, yet effective, time budget, visit http://kenrupert.com and contact me. I can work with you to determine where you might be able to gain some time synergies in your life. If you are interested in other aspects of life coaching, such as personal success coaching or strategic coaching, please mention these on your contact form.
I am happy to announce that I have completed the manuscript for The Dynamics of Abundant Life: Living a Life of Purpose and Meaning. This manuscript now enters the next phase of pre-publication work. Continue to visit my website (http://kenrupert.com) for the most recent updates on its release.
In a recent non-scientific poll I conducted, respondents indicated that there were five primary reasons why they were unable to achieve their goals. Thirty-three percent of those responding said that they fail to achieve their goals because they do not have the correct resources. Although a lack of resources can contribute to not achieving a goal, not having the correct resources is a failure of the individual or organization setting the goal.
Let me give you an example. If I set a goal to be promoted by the end of the year, but I lack the education required, then there is a good chance that I will not be able to achieve my goal. However, if I have done an accurate gap analysis, I would have determined that I need to pursue more education, thus putting in place a goal to gather the correct resources to accomplish my ultimate goal of being promoted.
The process used to set a goal can be just as important as the goal you are setting. If you set a goal using the strategic model I advocate, you are less likely to fail due to incorrect resources. Goal setting should be a simple three step process. Anything more complicated than that is wasting time. The three steps are: conduct a present state analysis, then establish your desired future state and, finally, conduct a gap analysis to determine what you need to do/have in order to succeed.
However, if you fail to achieve your goals because of the second most identified problem, you will truly have a problem being successful at anything. A quarter of the respondents stated that procrastination was the cause for failure. I remember having one client say, “Ken is going to help me with my procrastination.” And then after a long pause he said “We’re going to get started next week.”
Procrastination has many roots. The biggest one is the level of importance. The more important a goal is to you, the more motivated you are to achieve it. The reason why the cheetah fails to catch the gazelle is motivation. The cheetah is trying to catch lunch; the gazelle is trying not to be lunch. In addition to the level of importance, there is the pain vs. pleasure factor. When the pain of not doing something is greater than the pleasure of not doing it, you will be motivated to relieve your pain. Thus, you will work towards your goal even if you still fail to achieve it. Typically, those who procrastinate will work to the point where the level of their pain falls below the level of their pleasure. At that point, they will stop working.
Procrastination is not about the goal or the process used to establish the goals. It is strictly about the person and what motivates (or de-motivates) that person. Procrastination is a personal character flaw and it is not incumbent to any goal or goal setting process. When you say “I will do that tomorrow” I can almost guarantee that you won’t complete it tomorrow. By the time tomorrow gets here, it is today. For the procrastinator, tomorrow never gets here. You have to act in today in order to accomplish anything tomorrow.
Wise counsel on procrastination is found in Proverbs 6:6-11.
“Go to the ant, you sluggard! Consider her ways and be wise, Which, having no captain, Overseer or ruler, Provides her supplies in the summer, And gathers her food in the harvest. How long will you slumber, O sluggard? When will you rise from your sleep? A little sleep, a little slumber, A little folding of the hands to sleep—So shall your poverty come on you like a prowler, And your need like an armed man.” Be that ant. Stop procrastinating and take ownership of your success by setting and achieving goals.
The third reason given for failure to achieve goals is the lack of planning or improper planning. This can be anything from not having the knowledge of a solid strategic goal structure to a lack of attention to detail. If you use the three step process, you should be able to construct solid strategic SMART goals without problems. Therefore, if you fail to achieve your goals, it is a good possibility that you have not paid enough attention to the details.
When setting goals, keep in mind these three truths: life happens, constraints exist, and details matter. Let me explain, life happens’ first. Life happens around you, to you, and through you. Life will interrupt your plans, it will challenge you abilities, and it will cause you to question your ideas. Therefore, you need to build flexibility into your goals so you can pivot when these challenges occur. That is paying attention to the details. Ninety-nine percent of success comes from understanding where failure can occur and making adjustments. Do not to accommodate failure, but rather try to eliminate its possibility.
Along with factoring in life happening to your goals, you need to work within your constraints. You only have 168 hours in a week. Chances are you are working with a limited amount of income. You have obligations, necessities, commitments, and personal desires that require a large percentage of your resources. These constraints can cause you to under-estimate what it takes to achieve your goals. Again, the details matter.
The practice of planning cannot be under-estimated if you want to achieve your goals. Planning requires you to consider the details in best case scenarios and worst case scenarios. Looking at both ends of the spectrum allows you to create some flexibility into the process, which in turn, provides a wider pathway towards achievement.
Failure to execute was the forth reason given with 12.5 percent of respondents indicating this reason. I believe that we are really good at setting goals. I believe that well meaning people seek to be more effective and efficient in their daily lives. But failure to execute is less about the goal and more about actually developing a plan of execution. Setting goals is the easier of the two activities. It is easy to say, “I want to visit Colorado next autumn.” It is more difficult to devise a strategy for how you are going to accomplish that goal.
Goals and the strategy for accomplishing them are inseparable. A goal without an achievement strategy is what I call a dream. I dream of going to Iceland and visiting the Blue Lagoon. This is a dream because I have not fashioned any strategy for how and when I will accomplish this. The strategy for accomplishing your goals is designed in the gap analysis. A gap analysis is used to determine what you need to do or have in order to succeed. This is where the strategic planning enters into the goal setting process.
Therefore, if you have correctly established your goals using the three step approach of present state analysis, desired future state analysis and the gap analysis, you will have your goal with an execution plan built in. This will enable you to be more successful in achieving your goals.
The final reason given, with just 8.33 percent of respondents citing it, was goal dependencies. Goal dependencies are unrelated or uncontrollable external influencers that increase the risk of failure. When you set goals with dependencies, you are setting yourself up for failure. I have several rules that I use when setting goals. The primary rule is “Never set goals that depend upon someone else.”
We see this in the corporate landscape all the time. The problem of achieving a goal that is tied to another person’s actions is that you actually spend more time managing the other person’s actions than you spend focused on executing your plan. Organizational goals often drive the behavior of self-realized achievement. This is the mentality which states; “As long as I do what I am responsible for, the finger of failure cannot point towards me.”
Unfortunately, organizations cannot get away from these types of goals since there is a collective team dynamic. However, on a personal level, you should stay away from goals that have dependencies. Even when you are setting goals with your spouse, you should determine who has the primary responsibility for goal achievement. Focusing on the correct goals will ultimately result in you and your spouse achieving the desired future state.
If you want to learn more about the three-step goal setting process, visit http://kenrupert.com. If you are considering a life coach to help you achieve your desired future state, I would be honored to provide you with a free consultation. Every successful athlete has a coach. Every successful professional should have one too. If you would like me to come to your organization and provide instruction on goal setting and execution strategy planning, please contact me at email@example.com.
Mergers and acquisitions can have a negative impact on employees. Taking these simple steps now can position you for success later.
In times like these, you have to think of how you are positioned to absorb difficult situations. You need to examine your position in relationship to three important aspects of your financial picture. If you are impacted by the current economic and employment conditions, then you should read with interest these suggestions. Recently, a large Carlsbad, CA company announced that it was being purchased by a competitor located in Waltham, MA. Why is that significant to you? If you live in Maryland it is significant because the Carlsbad, CA. company is Life Technologies Corp. Life Tech (as it is known) employs many in Frederick and from the surrounding area. If you work for Life Technologies or if your business is associated with Life technologies, chances are you will be impacted by the pending transition.
On a more global note, if your company is bought out by another company, you could be facing some of the same realities that the employees of Life Technologies are facing right now. With mergers and acquisitions there is always the potential for layoffs. Companies who compete in the same industry will often have overlap in their operations. This results in structured reductions in human resources and in some cases, the selling off of parts of the original business. I experienced this when C&P Telephone merged with NYNEX and became Bell Atlantic and when Bell Atlantic merged with GTE to become Verizon. Each subsequent merger brought a reduction in head count and selling off of parts of the businesses.
This, however, is not about these companies specifically. I wanted to explore the impact of this type of situation in relationship to the employee’s experience. Specifically, I want to address that employee’s broader financial concerns. If you find yourself in the aforementioned position, you need to be considering how to make adjustments in the event of the worst case scenario. If you have positioned yourself well, you will be salivating at the sheer possibility of a severance package. If you have operated in the realm of “it will never happen to me”, then you need to begin to think in terms of how to position yourself to absorb a potential layoff.
Let’s first look at your position in relationship to the company. Being totally dependent on a company leaves you vulnerable to crisis living. To determine your dependency on your employer, ask yourself this question. How long could I survive if I were to be laid off today? If you have a three to six month emergency fund your answer is quite simply “about three to six months.” However, if you have just a few thousand dollars in the bank, your confidence to survive will be quickly eroded. Three to six months of expenses is nice, but three to six months of gross salary is better. Therefore, it would be a smart move to cut back on your budget and begin to put away as much additional cash as possible (more on this in a minute).
With the current employment environment, it is difficult to make a career transition across disciplines. That simply means that moving from, let’s say, the telecommunication industry to the bio-technology industry will be a hard sell. Unless your intangible assets can easily transition to a different industry, you will be hard pressed to cross industries. Therefore, one of the best plans you can have to create possibilities is to be a lifelong learner.
Take the time to learn disciplines that are outside of your current discipline of expertise. By doing this you can demonstrate your ability to learn a variety of skills and show that you take an interest in broadening your knowledge. If you find yourself in the position of being out of work through layoffs, you can market your advance skills and knowledge as part of your intangibles. This might mean focusing on completing your degree or picking up a certification in an unrelated field of study.
The second consideration you need to make is your position in relationship to the economy. The larger the buffer you create between you and life, the better you are positioned to handle the challenges of life. To determine if you have a sufficient buffer between you and life, ask yourself this question. How much space do I have in my current budget between assets and liabilities? The greater your debt to earnings ratio is, the greater your ability to absorb a negative life event such as a layoff.
This ratio measures the percentage of your income that is committed to paying off debt. The measurement is total debt (not including your mortgage) divided by your monthly budgeted income. If this ratio is 15 percent or less, you are maintaining a sufficient buffer. If this ratio is between 15.01 and 20 percent you are at risk for major impact if you were to suffer a negative life event. Anything over 20 percent means you do not have a buffer between you and life.
The ideal position is to have no debt including the mortgage. When you are debt free, you have created the greatest buffer between you and life. In this situation, if you were to receive a layoff notice, you would simply ask, “What is the severance package?” because you have a significant buffer between you and life. If you have two incomes try to live off of one and bank the other. This will increase your buffer between yourself and life.
The last consideration to have is your position in relationship to your goals. If you desire to be able to choose your retirement date and not depend upon the government to choose it for you, then you need to create complex pathways of achievement. It sounds daunting but a complex pathway is nothing more than a number of complimentary pathways of achievement that have dependencies. Complimentary pathways of achievement are nothing more than simple goals that work in tandem towards your success.
Simply stated, your goals should always be moving you towards your ultimate target of creating space between you and life. When you have honed your goals to your ultimate target, you do away with the frivolous targets. Although taking a vacation is nice and in some cases recommended, it should not be a target. Ahh, shocking! Vacations are not life sustaining goals. Vacations themselves are not bad, but they should not have priority over more life impacting goals such as retirement. Taking a vacation does not put space between you and life, and remember that is what we are talking about here.
Generally speaking, getting laid off will impact your entire existence. However, if you continue to gain knowledge in other employment disciplines, reduce or eliminate your debt, and set goals targeted towards life sustaining targets, you will create the space required to manage a bad situation. You need to do these activities in consideration of your position in relationship to your current employment, the economy, and your goals. You also need to do these disciplines while you are employed. Trying to put these disciplines in place after you have received your layoff notice will create crisis living.
If you feel stuck and are having a hard time getting a sense of direction, consider adding the services of a life coach to your plan. If you have too many irons in the fire and do not know which ones are important and which ones can be removed, consider the services of a life coach. A life coach serves as a strategist, an accountability partner, and provides the support necessary to achieve success. You can learn more by visiting http://kenrupert.com.
With the conclusion of tax season upon us, I thought it would be appropriate to discuss simple, yet often overlooked, financial behaviors that can catch us off guard.
The other day I was asked to discuss the reasons why someone should not cash out his 401K after being fired or laid off. As important as it is to not leave retirement savings sitting in a previous employer’s 401k, it is equally important to manage those dollars properly. It might be tempting to cash out the account and use the money as a stop-gap emergency fund, but it is not a wise idea to view the value of your 401k as liquid cash. For starters, the monies contributed to a 401k are pre-tax unless your previous employer offered the 401k Roth, where you were able to contribute post-tax dollars. In either case, the company matching contributions must be made with pre-tax dollars causing them to be subject to taxation if withdrawn. When you cash out a 401k from a previous employer, you are setting yourself up for a large tax bill. In addition to the tax liability, you may also incur a penalty for early withdrawal. As a matter of common sense, losing nearly fifty percent of the value of your 401k to taxes and penalties is not wise financial management. If you are beyond 59 ½ years old, you can escape the penalty. However, the 401k contributions (if made pre-tax) and the company incentive match are still subject to taxes at your current income bracket. If you are in the 25 percent tax bracket, cashing out your 401k might cause you to show income that is subject to the highest tax bracket. That means you could be liable for taxes at the 39.5 percent rate instead of the 25 percent rate. Again, not smart financial management. There are two less obvious reasons why cashing out an old 401k is not advantageous. The first reason is what is known as opportunity costs. Anytime you unplug an investment, that is, remove the cash from an investment vehicle such as a mutual fund, you reduce the growth opportunities of that investment. Cashing out the holdings in a 401k takes the assets designated as a growth plan and moves them to an asset that is impacted by inflation and taxes. Until you can reasonably transfer the assets to another tax favored investment arrangement, it is best to maintain the opportunity for growth, thus leaving the assets in the 401k for the time being. Another reason not to cash out a 401k is the temptation to live above your means. As of December 2012, nearly half of all Americans live paycheck to paycheck. This statistic suggests that nearly half of all Americans spend every dime they make between paychecks and that a large percentage of Americans would be tempted to spend the cash from the 401k. Failure to set aside the amount required to pay any taxes (and penalties) would result in a tax emergency the following year. Cashing out an old 401k could result in a ripple effect for years to come. For example, in 2013 you cash out an old 401k. You are under 59 ½ so there is a 10 percent penalty. Without considering the ramifications of your actions, you decide that until you find new employment, you are going to “take some time for yourself” and you plan a vacation. The following year (2014) you file your taxes and realize that instead of being accountable for 25 percent in taxes, you are now in the 39.5 percent tax bracket. Because you spent the 401k assets on a “well deserved vacation,” you have no resources available to pay the taxes you owe. So, you decide to take out a loan or use a credit card to pay your taxes. This is the biggest mistake of all. You use debt to pay off debt. Since you are not employed, you have effectively created a multi-year debt payment for a single year financial requirement. Not having a plan for meeting your financial obligations results in a ripple effect for years to come. The best thing you can do with a previous employer’s 401k is have it transferred from the employer’s 401k management company to a rollover IRA with a management company of your choice. Direct rollovers do not result in a tax or penalty situation and it only unplugs the investment for a short time. Once transferred, you can re-invest the assets in a variety of ways to facilitate growth. Consider this thought. You have lived without this money and even though you are now unemployed, your primary desire should be to preserve your tax-favored savings. If you cash out the 401k, you will have a propensity to spend the money while you search for and secure new employment. You will also guarantee that you will lose any opportunity for growth. You will be less likely to set the cash aside and more likely to lose value to taxes, penalties, and inflation. If at all possible, once the assets are transferred out of the previous employer’s 401k management company to a management company of your choice, forget that you have it. If you want to learn how to do this, contact a financial planner or mentor who can help you. The last thing you want to do is inflate your annual income with pre-tax savings. It is likely you will enter the highest tax bracket and also incur a severe penalty. If you desire to build a strategic life plan, contact me by visiting the contact page on http://kenrupert.com and express your interest in accelerating your life to achieve your destiny.
Setting goals can be an intimidating process. Most people are used to the concept of making resolutions at the beginning of each year, but setting goals is something that happens, for most people, without a formal process. A lot of goals are set on the spur of the moment when something has to be done and no one is doing it. I am not a big fan of resolutions because, in most cases, resolutions are focused on setting aside bad behavior. Goals are focused on achieving progressive levels of success. Let me give you an example. If I make a resolution to lose weight, I have essentially resolved to change the behaviors that caused my weight gain. So, if I have been slothful, I need to change that negative behavior and try to replace it with a positive behavior. The problems with resolutions are, resolutions cause you to focus on the incorrect action, the action of exchanging behaviors. They cause you to focus on what you will be giving up instead of what you will be achieving. If you focus on the weight loss or changing an entrenched behavior, you will almost ensure failure. This is why. If you focus on losing weight and you make a behavioral change, there are two forces working against you. The first one is human nature. You, like so many others, have done what you have done because you have become comfortable in doing it. When you make a behavioral change, you become uncomfortable. When you become uncomfortable, you tend to drift back to the behavior that makes you feel comfortable; thus, failure. The second force working against you is what I call the pleasure/pain quotient. The pleasure/pain quotient is the ratio of pleasure achieved in relationship to the amount of pain experienced. If the pleasure you achieve exceeds the amount of pain you experience, then you are likely to be successful in replacing a negative behavior with a positive one. Since we tend to be pleasure seeking beings, this makes perfect sense. However, using the weight loss example, if you begin to exercise and fail to address other contributing factors such as diet and genetics, you can lose heart and drift back to the old behavior of slothfulness. In this case, the pleasure achieved begins to be surpassed by the amount of pain associated with not losing the weight. Therefore, you eventually fail to achieve your resolution. Let’s say you resolve to walk 2 miles a day to lose weight. You start in the spring when the temperature hits 65 degrees. You walk consistently throughout the summer deep into the autumn. But then winter hits and the temperatures drop to the single digits. All of a sudden, walking becomes more “painful”. By the time you are able to go out for your walk, it is dark, cold, and the wind is blowing. The increase in that pain level results in you rationalizing not going for a walk. By the time summer hits, you realize that you have not walked 2 miles in several months. Then you have to overcome the pain of starting a new behavior all over again. Resolutions just do not have the staying power of goals. An important distinction between resolutions and goals is that resolutions look back at what you have to give up. Goals look forward to what you can achieve. I believe that every individual, and every small business, needs to set two types of goals: strategic and annual. Your annual goals will support your strategic goals. Your strategic goals should support your VMP statements. VMP stands for your vision, mission, and purpose statements. The process of setting goals will not be so intimidating when you understand the flow created by well structured goals. Short-term goals, those where execution should happen within a twelve month period, are typically not strategic in nature. These goals are the building blocks of personal success. I call short-term goals the DNA of personal success. Goal setting starts with a simple process and can grow to complex in nature. The building blocks of simple goals are: Present State Analysis, Desired Future State, Gap Analysis, and Time. The duration between the PSA and the DFS is where you will identify your objectives. Objectives are those markers that indicate if you are on track for successful achievement. This is part of the measuring process. A present state analysis begins the process and answers the question “Where did you came from, and how did you arrived at your present state? By determining the pathway you took to arrive at your present state, you can understand patterns of behavior that need to be capitalized on or changed. Your desired future state is where you want to be in 90, 120, or 365 days from today. The gap analysis looks at what actions you need to take in order to achieve your desired future state. Eventually, your desired future state becomes your present state. The time frame is a measurement cycle of the goal achievement. A single pathway is created when you set short-term goals that build on each level of achievement. This is the compounding effect of goals that are targeted to achieve a single long-term outcome. Complimentary pathways are created when you set a series of single pathway goals that build on each level of achievement. Two or more single pathways that enhance each other but do not effect each other create the complimentary pathway. Each pathway compliments the other but is targeted for different outcomes. Complex pathways are created when you set a series of goals that have dependencies, where each goal has targets that impact the other goals as well as having various outcomes. This type of pathway looks complicated but in reality you have several goals that contribute towards an overall outcome. For example, you might have an overall outcome of increasing your financial stability. That is a broad goal. The single pathways might include 401k savings w/company match, a savings and investment goal, and paying down debt. Each goal pathway has a specific outcome but collectively they all roll up to financial stability. As you become more familiar with the concept of SMART goals you will find that is simply comes down to this building block. Present State – Desired Future State – Time Frame. In other words, I have “X” today and I want “Y” in the next 90, 120, or 365 days. This building block is specific, measureable, and time limited. Making the goal achievable and relevant is dependent upon your current state analysis, your current resources, and your SWOT (strengths, weaknesses, opportunities and threats). I will cover that in part two of Strategic Goals.
In tough economic times, many look for ways to cut expenditures in an attempt to maintain the necessities of life. Unlike the government, which can increase taxes to cover poor financial behaviors, most people cannot demand a raise to absorb the impact of poor financial behaviors. Therefore, many begin to look for expenses to cut and sometimes that cut takes the form of reducing annual expenses such as insurance premiums. However, making this move should be secondary to changing general budget allotments and current spending behaviors. Maintaining life insurance never seems important until a major life event happens. Here are some arguments for when is the right time to drop these payments. When I am working with a client who is contemplating the value of life insurance, I encourage that client to continue carrying life insurance until he or she is self-insured. Self-insured should be thought of as being able to replace an income, for the surviving spouse, at or near the same level through investments. This requires several pieces of the financial puzzle to be in place. First, the client must be debt free and must be spending less than the current income. Debt free includes even paying off the mortgage. Next, the client should be allocating a significant portion of income towards an investment plan that targets a 12 percent or greater return. By significant, I mean in excess of 50 percent of income. If the family is a dual income family, then one paycheck should be allocated to cover living expenses and the other income should be invested. If the client is replacing a $60,000 pretax income, the client would need to have $500,000 earning 12 percent annually to generate $60,000 in pretax income. With no debt, including the mortgage, this is plenty of income even after taxes. If the rate of return drops then the client will need to increase the principle investment amount. Thus, I always tend to encourage the client to use pay increases, bonuses, and promotion dollars to increase the base of his investments and not the base of his spendable budget. I work with one retired couple who is debt free (except for their mortgage in this case), spends less than their fixed income of social security, and has investments of just over $500,000. Their pre-retirement income was just over $65,000 based on a dual income. With no children at home, this couple has no need for life insurance. This example highlights the third aspect of answering the question “When is it ok to let go of life insurance? The client who is contemplating this financial move should not have any responsibilities associated with raising children. Thus, most young families would be wise to carry term life. But the older couple who is finished raising their children or the childless couple who is self-insured should drop life insurance if all other conditions have been satisfied. Having no debt (including the mortgage), having enough investments to replace an income, and having no child-rearing responsibilities are all factors to consider when deciding whether or not to drop life insurance. The final step in the process for my client would be to down size in the later years. After the children have left, there is no reason to maintain a four or five bedroom house. Moving might not be for everyone, but those who down size can significantly position themselves to increase their tangible net worth by paying cash for a smaller house and investing the capital gain. This is the hardest step to make for some couples, but from a financial point of view, it can be the most rewarding. Downsizing reduces your expenses and allows you to apply those funds towards more security or towards enjoying the later years in comfort. So the factors that need to be present are: 1. Debt free, including the mortgage 2. Spend less than current income 3. Commit a significant amount of income towards investments 4. Be positioned to be self-insured with investments that can replace the annual pre-tax income 5. No children in the house 6. Downsizing If you are considering how to maximize your resources for a brighter tomorrow, consider strategic life coaching. You can visit my website at http://kenrupert.com for more information. While you are there, consider joining the Marriage and Relationship Education Center as they offer Dave Ramsey’s Financial Peace University. The MREC is located in Carroll County Maryland. The classes are being offered at 255 Clifton Blvd, Westminster, MD. You can sign up for the classes at the following link http://www.daveramsey.com/fpu/locations/org/44293/class/228086 or follow the link on my website. While you are there, consider picking up a copy of my book Planned Excellence and begin to develop the Vision, Mission Purpose statements for your life. The Vita-Copia Group – accelerating your life to achieve your destiny.
Recently I was asked if an investment strategy should include precious metals, specifically gold and silver. There are a number of factors to consider when answering this question because recently investments in gold and silver appear to be a response to fear and not rational thought. The first aspect of precious metal investing you should consider is the buy-in / sell-out price. When you go to a precious metals dealer, keep in mind that the dealer is in business to make money. The typical purchasing process incorporates that fact in the buy price. Thus, dealers must sell above their costs and often times above the spot value of the precious metal. This means that precious metal dealers sell at a premium. Conversely, when a dealer buys from the customer, he will often reduce the price he is willing to pay. This means that precious metal dealers buy at a discount. The spread (the amount of money between the purchase price and the sell price) is the profit for the dealer. Basic economics, but it is amazing how many lay people who purchase precious metals fail to calculate this into the process. When you, the customer, purchase gold or silver above the spot price, you are increasing the amount of your investment costs. Thus, the spot price of the precious metal must increase in order for you to cover your costs. However, the converse is also true that when you sell the dealer will buy at a discount. This means that not only do you need the spot price to increase to cover your purchase premium, but it also needs to increase enough to cover the discount. On 3/5/2013 at 6:55:35 AM the bid price of silver was $28.83 and the ask price was $28.93 per ounce. On the same day the United States Mint was selling the one ounce American Silver Eagle coin for $50.95 per coin. If you were to purchase one American Silver Eagle from the mint (at $50.95) and you tried to sell it to a dealer (at some price below the $28.83 price) you would take a loss of nearly 50 percent. This is the first concern that anyone who is considering investing in precious metals needs to understand. The second concern is closely related to the first. Any investor needs to understand the fluctuation of metal prices. In uncertain times, metal prices can be wildly erratic. It is a real possibility that on the day you need to sell your metals, the price drops precipitously and on the day you decide to buy, the price skyrockets. These price fluctuations can significantly impact your return on investment. Couple this price fluctuation with the premiums and discounts of the precious metal dealers and you can begin to see why it is a questionable strategy to invest in gold and silver. However, there is another concern to consider. The areas affected by Super Storm Sandy and Hurricane Katrina give us an example of failed economies. The argument used to support investing in gold and silver is often the concept of a failed economy. Having precious metals in a failed economy is nearly useless. When an economy fails food, fuel, and water become the most important commodities. Actually, lead and copper will likely become more valuable than gold and silver in a failed economy because you cannot hunt with gold and silver. I have never seen a gold coin kill a deer. Additionally, think about what backs gold and silver; the American dollar. And if the dollar collapses, what would gold and silver be worth? Let’s carry that thought one step further. Today you use fiat currency to purchase gold and silver. When you sell your gold and silver you get back more fiat currency. One could make an argument that you are using a medium of exchange that is backed by nothing to purchase metals that are backed by the very currency that is backed by nothing. Going back to the original question: Should an investor consider investing in precious metals as part of a larger investment strategy? I would not advise it. However, if you find yourself wanting to purchase a little gold and silver, I would suggest purchasing the tangible asset and placing it in a safety deposit box at your local bank. Do not open a gold retirement IRA. Precious metals are already tax-sheltered. The only time you are required to pay taxes on the physical asset is when you sell the asset at a profit. (Did I recommend you retain all receipts for any precious metal purchases?) Therefore, it seems redundant to hold tax favored physical assets in a tax favored account. If you are tempted to open a gold IRA, ask yourself this question first. “What is in it for the manager of a gold IRA?” If you must have gold and silver, take your time and shop around to find the right price at which you are willing to enter the market. Hold the physical asset in a safety deposit box, and only use money that you will not need in the next ten years. Be aware that owning gold and silver can give you a false sense of security. Be very aware of commercials that hype the price of gold up to $10,000 in the near future. Investing needs to be rational and investing in precious metals is more about emotions than rationale. I would advise against taking the emotional rollercoaster ride and instead stick to investing in solid, consistently performing companies.