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As someone who works directly with clients on helping them with their financial plans and investment decisions, it wouldn’t be too far off to think that I might not do too bad on my own personal investments. Well, truth be told, I have indeed made some high-return investments over the years. The funny thing about that is when I think about “the best investments I ever made”, they are not stocks, bonds, mutual funds, real estate, venture funds, or the like. The best investments that I have ever made came from investing in myself and/or my practice. The returns may be harder to quantify, but I would venture to guess that it has been exponential. Below are my top three “best investments I ever made”:

Going Back To School For An MBA

I’ve always been someone who wants to constantly improve, both as a person and as a professional. In an article that I had previously written, I discuss how an MBA prepared me for my career as a financial advisor. This was a both a huge gamble and a big-time winning investment for me, especially since I initially entered business school without a clear roadmap of where the advanced degree would take me. After going through the MBA program at USC’s Marshall School of Business, the greatest value I gained came from improving my qualitative skills, such as working with people, networking, effective communication, work ethic, and time management. While I already had these skills at a basic level, it wasn’t until after obtaining my MBA that I realized a deeper level of utilizing those qualitative skills in my career.

Hiring A Personal Trainer

Without our health, we will not be able to enjoy all of the great opportunities at our disposal today or in the future. Because of this fact, I strongly believe that hiring a personal trainer was one of my best investments. In this article, I draw several parallels between personal trainers and financial advisors, ultimately discussing the value that both can bring, respectively, to your health and finances.

Investing in my health by hiring a personal trainer is one of my best investments for several reasons:

Education

For most, it may not make sense to have a personal trainer for their entire life. However, the knowledge and education around the body, nutrition, exercises, etc. that you will gain from hiring a personal trainer will reap returns for the rest of your life. By being more aware and knowledgeable than you were before, you may miss out on potential future injuries or poor food choices that can lead to debilitating diseases.

Consistency

We are more likely to stick to certain regimens when we are simply told what to do. By being on a plan and schedule with my personal trainer, I did not have to worry about anything except for showing up and working hard. We were on a consistent regimen, and I saw results; in fact, I lost more than 15 pounds over the course of several months when I compared my heaviest to my lightest weight!

Decreased Future Medical Costs

By being consistently active and doing exercises that I would not normally do on my own, my personal trainer made sure that my comprehensive training program would benefit me in the realm of longevity. Because of that, I decrease my chances of needing to undergo major surgeries that someone who lives a sedentary life may have to undergo. This means less money spent on future medical needs and long-term care.

Spending Time To Imagine And Dream About The Future

Sometimes work, family, and social events take up all of our time. However, if we never stop and take time to plan, strategize, and dream, we will never accomplish our goals, let alone have something to work towards. While it may not seem like an investment, “spending time to imagine and dream about the future” may be the lowest-cost, highest-yielding investment there is.

In this article, I talk about planning ahead and setting financial goals. It is important to be proactive in planning for the future that you want. The key here is to write your goals down, break them into smaller goals, and find someone (or a community) that will hold you accountable. Your success lies heavily in setting “meaningful” goals. When you set goals that are meaningful, you will be much more likely to reach them.

For me personally, I’ve found that in those times that I dedicate to imagining and dreaming about the future, I’m able to create a reinvigorated excitement for what’s ahead. The return from spending time planning for your future should not be discounted. The yield is immeasurable, and all it costs is your time, creativity, and dedication.

The investments discussed above are not what you’d typically discuss with your financial advisor. However, I hope you were able to see how much of a return each of those items have provided me. With that said, if you are contemplating post-secondary education, different ways to invest in your health, how to map out your future goals, or anything else, please do not hesitate to get in touch. You can always call my office at (949) 221-8105 x 2128, or email me at michael.loo@lpl.com.

Each of our lives is comprised of elements that create a story. Our financial lives are no different – the elements include our bank accounts, retirement accounts, mortgages, car loans, student loans, investment accounts, stock options at work, life insurance policies, credit cards, etc. When most people think of their financial life, they think of these elements but have trouble contextualizing them in their overall financial story. All of these elements are simply tools that either help or deter us from our goals. Before analyzing the tools, it’s important to understand why you’re using them and the goals and priorities that create the story which requires them.

One way people analyze these tools is by researching investment returns. Before delving into the world of returns, think about why you are investing in the first place. Your investments should reflect your overall financial priorities. If the risk tolerance in your investment appropriately reflects the time-frame you plan on needing the money, then worrying about investment returns day-to-day can be more of a headache than it’s worth. For example, if you are 35 years old saving for retirement at 60 – you should be aggressively invested if you’re comfortable with that. Because you have 25 years before you plan on using the money, short-term fluctuations in the market shouldn’t really concern you. In fact, if the market does go down and you are still contributing to your retirement, you are technically “buying on sale” – getting more shares for the same dollar value. Contributing to your retirement in up-and-down markets is called “dollar-cost-averaging” – meaning you average out the cost/share of an investment by contributing consistently rather than trying to time the market and invest when you are “buying low”.

There are many benchmarks in the financial industry to compare your investments to and track performance. Some examples include the S&P500 and the Dow Jones Industrial Average for large-cap stocks, the Barclays US Aggregate Bond Index for bonds, and the MSCI Index for international investments. It’s important to understand how your investments are doing in relation to the overall market – it keeps you abreast of what you are investing in and prompts questions you may not ask otherwise – such as what fees you are paying, who’s helping you decide what to invest in, and how much risk you’re taking on compared to the benchmarks you’re using as a comparison. However, the benchmark you should habitually pay more attention to than any other is your particular goal with each investment and your overall goals in terms of building wealth.

Focusing on investment returns only paints half of the picture when tracking progress because it is completely out of your control. If you can confidently say your investments are well diversified and invested according to a risk-tolerance you are comfortable with, there is a much more important benchmark to track than returns. Instead of relying on your investment vehicles to do all the heavy-lifting, you should use your investment behavior as the ultimate indicator to determine if you’re making progress or need more work. What are the financial goals you have in mind? To retire by 55? To save for a second down payment on a house? To pay off your mortgage? Help your children pay for their college tuition? Protect your investments and family in case of a long-term illness? Reduce credit cards and student loans? Build emergency savings?

When you are focused on goal-based financial planning, there are a lot of benchmarks to concern yourself with other than the hype involved in investment performance. Are you saving more this year than you were last year? Did you increase your savings rate when you received a raise? Does the money you are spending appropriately reflect the values and priorities that are most important to you? Are you using extra income to increase investments and decrease liabilities? By focusing on why you’re investing in the first place and the priorities that matter to you, it’s easier to ask the right questions and monitor progress. Once you know what you’re shooting for, a Decision Coach can help you understand the appropriate tools to get there.

The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries and widely held by individuals and institutional investors.

The Bloomberg Barclays U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.

The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI EAFE Index consists of the following developed country indices: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the UK.

Each index is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. Past performance is no guarantee of future results.