Sound People Investing

This summer I’m learning about financial investing, the market, economics and how emotional volatility affects judgment in one’s investment strategy.  A basic investing principle is that you find companies that are undervalued, whose stocks are priced below what they’re worth, and then buy their stock—which is ownership in the business–leaving a margin of safety for market fluctuations that occur inevitably.  (Disclaimer: This is not financial advice and I am not an expert.)

Many of us are situated in life in a way that allows us to have input into the lives of others.  This may be because of our positions in the workplace, an organization, a group of people and our families.

I’ve had the privilege for quite a few years to be asked to mentor people in their personal, spiritual and professional self-development.  I don’t ask for this—it’s always a case of being invited into someone’s life and business.  I don’t take it lightly.

I’ve learned some things after doing this a while.  My recent learning about sound financial investing has stimulated my thinking about the kinds of people we do and don’t invest in with our time, talent, energy and money.

What then are indicators of strong value in another you’re seeking to mentor?

  • Strong work ethic. Two of the finest guys I ever worked with happened to be brothers raised on a farm.  During the six month time I mentored them, they both carried multiple jobs, including the farm, and each worked ninety to a hundred hours a week.  They weren’t looking to outsmart the work.
  • Bias for action. They deliver on their word and aren’t all about planning to do something.  They actual follow through.  They ship.
  • Character. They are true to their word and apologize when they fall short.  They’re not trying to live two, or three, or four, lives.
  • Intelligence. They can think on their feet, whether well-educated or not.

There are other value indicators.  Add some of your own. What kinds of qualities other than these do you find motivates you to invest in another?

Now, what are indicators of weak value in those into whom you intend to pour your life and learning?

  • Liars.  No brainer.  If they have trouble telling the truth, your investment is already at risk.  Your name is attached.  Bill Hybels, minister of a very large church in suburban Chicago, says that if you find someone on your staff who plays fast and loose with the truth, “Fire them.  Fire them immediately.  Fire them.”
  • Lack of initiative. A former colleague and I had a discussion many times over the question, “Can you really motivate someone who will not motivate themselves, is not a self-starter?”  We both concluded, having managed lots of people over the years, that you can’t.
  • Sloppy communication habits. I once lived in a region where someone in business could make a ton of money simply by answering their emails and phones and text messages promptly.  A common attitude with a lot of business people who live in the area is less than diligent about this. There are some forms of financial want that are avoidable.  This is one of them.  If people are slipshod about basic courtesy and good business sense in the matter of prompt response, move on.  Your time is too valuable.  If you’re in business with them, you’ll go broke.

There are other signs of potentially poor investments.  What are some you can name?

There is a place for charity and for giving people a second chance.  This post is not about that.  The market goes up and down and people have good days and bad.  This is about well-established habits of engagement with life.

Invest carefully.

 

Recommended Resources:

A Game Plan for Life: The Power of Mentoring (John Wooden & Don Yaeger)

Mentoring 101 (John C. Maxwell)

Tuesdays with Morrie: An Old Man, a Young Man, and Life’s Greatest Lesson (Mitch Albom)

 

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Educate Yourself On Money

Know Your Money

“You must walk to the beat of a different drummer. The same beat that the wealthy hear. If the beat sounds normal, evacuate the dance floor immediately! The goal is to not be normal, because as my radio listeners know, normal is broke.” (Dave Ramsey)

Now, more than ever, you owe it to yourself and those you love to do your financial homework.  There are lots of audio and video resources to help you get a handle on your money.  Among them, Dave Ramsey (quoted above).  Scores of people have liquidated their debt and got on their feet by taking his Financial Peace University class. Many others have been helped by the direct and passionate style of Suze Orman.  Here are some things I am reading and learning:

The current debt-ceiling crisis in Washington D. C. highlights the need to be aware of our money—what we have, what we owe, where to get more, etc.

Do yourself a favor and get yourself an education—if you haven’t already done so—on the way money, debt, deficits, markets, lending, borrowing and the like functions.  In this time, more than ever, ignorance is not bliss—it is dangerous.  Be awake.

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The Fine Print? Pay Attention

Fine PrintIf you’ve ever purchased a new home or vehicle through an automotive dealership, you’ve been through the experience of signing, initialing and dating voluminous documents related to the transaction.  Disclosures, releases, obligations, waivers.  It can be daunting.  The easiest thing in the world is simply to sign, initial and date with only a cursory glance.

I know.  I’ve done it numerous times.  So have you.  And that is the problem.

We call such encounters “signing our lives away.”  Given the careful, legal language in which these documents are composed, it’s not far from the truth.  And in the normal course of events, one normally doesn’t think much of it.  Just sign the thing and be done with it.

Until you get surprised when one of the terms, contingencies or disclaimers affect you—your plans and your pocketbook.  You feel as if you’ve been sucker punched.  It feels that way.

But you haven’t been blindsided.  One of the documents you signed said, in effect, that you had a full understanding of the terms of the agreement.  And you’re now legally liable to fulfill the terms of the agreement.

Liable to pay double-digit interest on that credit card when the economy flags and banks are low on cash.   Liable to have to negotiate the use of your own art if you’ve surrendered copyright to a publisher.  (I know one recording artist who, when younger and untutored, gave up ownership of his music and now has to lease master tapes from the record companies just to press CD’s for his fans.)

No, it’s not unfair.  It’s called fine print.  And most don’t read it.  Those who do are often the ones who are better off financially than the rest of us.  They’ve done due diligence in their financial affairs.  Part of their reward is an often proportionate lack of unpleasant “surprises.”

What to do?

  • Take your time when signing documents.  Read the small print.  Ask questions.  And don’t be intimidated if the agent with whom you are doing business seems impatient.  You have everything to gain or lose by taking the time you need to know what you’re getting into.
  • Do your homework.  If you’re buying a car, go in knowing the worth of the vehicle better than the salesperson.  The blue book information is available on the Web.  Same for house and land purchases.
  • Learn about compound interest, something Einstein purportedly called “the Eighth Wonder of the World.”  You’ll buy far less and shop around more before parting with your hard earned money.

This is a step that those who would own their future must take.  Be diligent and ahead of the pack.

You’ll be pleasantly surprised.

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