VALENTINE?S DAY & YOUR MONEY: A MATCH MADE IN HEAVEN
Posted by
on 02-06-2010 at 12:37 PM
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Thinking about Valentines Day? Last year's bad date? Don't despair. It's not as bad as you think. Here's some good news: you may not know it, but when it comes to your money, that date can teach you an awful lot about investing.
Think I'm joking? Think again. Although I was a far cry from being the King of Dating, I did have a few occasional lucky streaks in me. And looking back over those rare few moments, my moderate success on the dating circuit did teach me quite a few things about prudent investing:
1) DON'T JUDGE A BOOK BY ITS COVER
Dating: The guy was over a half-hour late, his outdated shirt barely matched his Taco Bell stained pants, the rain gave him a lethal dose of bed-head and back then the busboy was making more than he was. If that wasn't bad enough, his humor was a bit stale and the car he drove had a weird putter that attracted nothing but aliens from the evil Planet X. While at first the girl thought it was going to be a dinner date from fiery hell, little did she realize that guy was I, and I'd soon wind up being the one she'd marry.
Investing: The receptionist was sure nice, but the carpets were dull and the musty furniture reminded you of grandma's place in Brooklyn. You were ready to take your money to that Private Wealth Management Firm --- the one with the white marble staircase and baby grand --- but when the well-mannered financial advisor appeared, you figured you'd be courteous and give him a few minutes of time. A little into his pitch, you were most pleasantly surprised when he touted low cost, tax efficient investments with attractive rates of return that perfectly matched your goals. It was then you realized there's a reason the furniture in his place is a bit out-dated, mainly, because the guy most certainly isn't paying for it out of your own pocket.
Lesson Learned: First impressions can easily get the best of us. Whether it's a date or your money, taking a step back to peek behind the curtain will typically put both your money and heart in a much better place.
2) COSTS COUNT
Dating: She liked Dylan Thomas, idolized Ginsberg, despised the conformists and was clinically depressed that she missed last year's Monterey Pop Music Festival. The perfect 10 from down in the Village strummed an acoustic, wrote poetry and even donated your favorite Levis to a homeless guy on the street. While at first lust got the best of you, months after helping her pay the rent, her organic meals and for all those Andy Warhol movies you pretended to like, you were finally worn out, leading you realize that when it comes to dating, costs most definitely do count.
Investing: The mutual fund was barely moving. Five years into it, you just couldn't quite figure out why you weren't making much money. Then, one fine day, you wisely took the time to research the fees you were paying, only to realize the fund was charging you well over 5% per year in annual costs and causing you all sorts of taxes.
Lesson Learned: When it comes to investing and dating, costs most definitely do count. Taking the time to evaluate how much you're paying for your dates and funds is an essential part of anyone's success.
3) CUT THE LOSERS, RIDE THE WINNERS
Dating: The first handful of dates were the stuff legends are made of, but by the time mid terms rolled around, Crazy Mindy crashed my college roommate's car, emptied his bank account, shredded his classic Dark Side of the Moon poster, caused him to miss the Macro Economics final and managed to give him one very fat lip. By the time graduation took place, my roommate ended up blowing his entire senior year trying to turn Crazy Mindy into the person she once appeared to be.
Investing: On paper, the company looked like a true winner. Not only was the stock going through the roof but even Madonna used its products. At first the investment took off, but no thanks to a deadbeat CEO and a few federal regulations tossed in, the stock began its perpetual downward spiral. Convinced it would come back, you held on, only to wake up realizing you would have been far better off giving Crazy Mindy your money to invest.
Lesson Learned: Crazy Mindy could care less about my roommate and likewise, stocks could care less about you. They don't know who you are and only you can fall in love with them. Love or money, when something isn't working, get out. Just cut the losses, move on and live to fight another day. The quicker you do that, the better things typically turn out.
4) DIVERSIFICATION IS THE KEY TO SUCCESS
Dating: Adam looked like Alan, Alan acted like Arnold, Arnold smelled like Arnie and Arnie reminded you of Alex. And just when you thought you found the Perfect-A, Aden stood you up just like Albert and Abe once did (or was that Alfonse?). It was then, in one fleeting moment of revelation, you finally realized the problem had nothing to you, but everything to do with guys whose names start with the letter ?A. ?
Investing: Credit crisis.. ? Need I say more?
Lesson Learned: Diversifying your investments is a critical key to investment success. Load up in one sector or stock and it's not a question of if disaster will strike, it's usually a question of when. Spread the risk, diversify your investments into the prudent, timeless fundamental asset classes and of far more importance, consider dating guys whose names start with the letter B.
CONCLUSION
Bad date? Who cares? Next time something doesn't turn out so well, simply shake hands with your date and thank them for making you a richer person.
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