Taking the Mystery out of your Money – “Common Sense”

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August 23, 2019
Taking the Mystery out of your Money – “Common Sense”

Image Copyright Ted Grussing Photography – Used with permission

Successful investing can seem quite mysterious.  But like most things, if you take it one step at a time, even the beginner can learn and achieve success.  It all depends upon your dedication and your willingness to seek help.

We believe three things are needed to become a successful long-term investor:

  • Common Sense
  • Understanding of Market Emotion
  • Useful Information

Let’s kick off this series by discussing common sense, deemed by most not to be so common.  We have all heard, “if it sounds too good to be true, it probably is”.  Many of us have painfully experienced this reality.  There is also an investment philosophy you may not have heard of… The TINSTAAFL Theory.  This is simply the acronym for There Is No Such Thing As A Free Lunch!

While dining out, we sometimes notice a free dinner seminar taking place and watch the people filing in and wonder how many of them really think that dinner is free.

Someone recently asked Lois to explain why the dinners are not free.  Here is an example from her point of view.  Let’s pretend I work for a company selling investments; I offer a free dinner for attendees; 10 people sign up and they all order the most expensive things on the menu – average cost per person of $50.00. My total bill for the “free” dinner would be $500 plus tip.

Let’s assume just one person out of the 10 attendees comes in to see me to and I sell them a $100,000 annuity.

Let’s further assume my average commission is 5-7%.  With a signature and a 5% commission, I just made $5000. So was the meal really free?  It was for me.  And, most people have no idea how much that commission was. Common sense always asks ‘what’s in it for me?’ when it comes to your money and investments of any kind.

So remember, keep your common sense wrapped tightly around you when you hear “Free Dinner Retirement Seminar”.  See you next month when we take a look at human nature and the role it plays with investing!