In the early nineteenth century, the art of weather predicting was considered a form of witchcraft. That may seem silly nowadays with our satellite photos, weather maps, and the plethora of meteorologists on TV, but none of those things existed back then. Predicting weather was more akin to calling a psychic hotline than it was to science. Back then, and still today, without empirical evidence, predictions about the future are almost always wrong. And even with all his resources today, our local weatherman is still wrong sometimes.
By the same token, if you track the collective performance of the current batch of financial gurus and MSNBC talking heads over the last ten to fifteen years, it is baffling how much confidence they still lay claim to. But then again, human beings have always been attracted to predictions and forecasts. As long as there is a willing audience, the performers and marketers will always be there to profit from it.
So what is Future Proof investing? Let’s start with what it is not. It is not a new attempt to predict where the stock market will go. It is not a new mathematical algorithm to predict which investments to buy or sell. It is not a psychic hotline.
Future Proof investing is a process that enables investors to slowly and intelligently gravitate away from gambling with their financial future. The process helps the investor to replace risks with guarantees and substitute predictable growth and safety where overly conservative decisions have created unintended losses. The overriding mantra of Future Proof investing is to plan and create an attainable and sustainable financial future.
The Future Proof process is a layered and iterative approach. This means it starts at the top layer and carefully works participants down to the core components at a predictable path and reasonable pace.
The starting point is to simply answer the following four questions logically and truthfully. These four questions are the only future predictions required to Future Proof your investments.
- On the day you plan to start your retirement, do you believe that taxes will be higher or lower than they are today? This is an extremely important question for anyone’s financial future, as taxation is the number one wealth risk known to man.
- Have you calculated the income you’ll need in retirement, adjusted for inflation? In other words, have you taken into account that in fifteen, twenty, or thirty years your current income level might be the new poverty level due to inflation?
- Will you outlive your money during retirement? This could be the most important question of the four, and it has risen to the forefront in recent years because the typical Baby Boomer is now expected to live well into their eighties or nineties, or even older.
- What do you wish for your heirs after you pass away? Do you plan on providing an inheritance for your children and your children’s children?
By simply answering these four questions logically and truthfully, not emotionally or with politically correct idioms, you can begin the process of Future Proofing your finances.
While these questions seem obvious, many Americans have either chosen or been led to ignore them. Our goal is to help you honestly answer these questions and then apply the results to your financial plans. That’s the best way to figure out how to dodge the pitfalls and make a plan for an attainable and sustainable future.