Power Up Wealth podcast – Episode 90 – Anchoring Investment Goals
James Derrick 0:00
Breaking news with alarming headlines can easily divert us from our long-term ambitions. I’m James Derrick, and today we will explore with our guest and expert, Sharla Jessop, how to anchor yourself to a set of values and goals.
Sharla Jessop 0:25
Welcome to the SFS Power Up Wealth podcast, where we provide impactful insight and expert opinions on timeless financial principles and timely investment topics, preparing you to make smarter decisions with your money.
James Derrick 0:48
Thank you for joining me today, Sharla.
Sharla Jessop 0:50
Thanks for having me.
James Derrick 0:51
Sharla is the President of Smedley Financial Services. She holds a Certified Financial Planning designation, and we are fortunate to have her with us today. Sharla, you recently wrote about anchoring investments to goals, and you mentioned in discussion the meaning of money, which I know is very deep, but it means something different to each person. Could you begin by talking a little bit about how the meaning of money varies from person to person.
Sharla Jessop 1:15
It does. Everybody has different ideas, different passions, different ambitions about what they want to accomplish in their life and what they want to do with the money that they save. And I’m not talking about just the money that you’re using to pay for your rent and your or your house payment or food and things like that. I’m talking about the discretionary money. The money that you actually get to do something with and decide how it’s going to be used. And it comes back to the idea of anchoring, anchoring your money to a specific goal or idea will help you be much more successful as you save and prepare for whatever you’re going to do.
James Derrick 1:50
Do you find that it needs to be a concrete item, like a home, or does it work just to say to me, money is independence? Is that too vague?
Sharla Jessop 2:00
That is a good statement, and it’s a true feeling and a true emotion. But what does independence mean to you? Because independence is an idea or a feeling, but how do you capture that independence? What are you going to do with your money? Does that mean that you’re going to save more for retirement in the future? Does it mean you’re going to save more outside of retirement so that you can have flexibility on how you’re going to use your money. Does it mean I’m going to be debt free?
James Derrick 2:27
Good questions. When you sit down with people as a financial advisor, do you flush this out with individuals and couples and families?
Sharla Jessop 2:37
We spend a lot of time trying to dig deep so that we know them very well and talk to them realistically about what’s important to them. What about their values? What are their goals? What are they trying to accomplish? So that we can help them create anchors with their money that will help them be more successful. Let me give you a couple of examples. If you have an idea that I want to retire someday, but you don’t really have a path to do that, or you haven’t set that as your anchor. And now know I’m going to retire at this time, I’m going to want to live this lifestyle, and this is how much money I’m going to need to live on on an annual basis to determine how much you’re going to have to save to get there. That’s your anchor. Once you create that anchor, it’s going to be really hard for you to be swayed by putting money aside for that goal. So I’m going to set my 401(k) contribution at this amount. It’s going to be consistent over these years. And I’m going to invest and diversify into this portfolio, and I’m just going to keep chunking away my money. That anchor is going to help people weather through a lot of storms. First of all, it’s going to keep them contributing, because it comes right out of their paycheck. What happens in the economy will have less of an impact and the market more specifically, because people are talking about the economy, but they really watch what’s going on the market, it’s going to have less of an impact if they understand, I’m putting my money aside on a monthly basis, but I’m not going to use it for umpteen years down the road. So whatever happens in the market is okay, and if I’m putting money aside, even if the market drops significantly, I’m buying in at a lower price, I’m getting a better deal. It just helps them stay focused by having an anchor.
James Derrick 2:38
Do you think it’s ever too late to drop an anchor? You know, when the distractions of the storm are all around us?
Sharla Jessop 4:24
No, it’s never too late. And I think it becomes even more important to have an anchor at that point than maybe later in life. And the reason being, let me give you another example. We worked with a client one time who came in and they wanted to retire, and so we were talking about their retirement plan and their values and their goals, and that was something they wanted to do. And as we looked through things and worked into their planning, we discovered that they had a lot of debt. That debt was preventing them from having the money to save for the goal that they wanted. So their anchor became getting out of debt, and then they kept on the fridge where they could see it daily, because sometimes anchors should be visual. You need to be able to see it. It’s emotion that you’re really tying to how their debt was decreasing over time. And as their debt is decreasing, they can take that money and continue to apply some of it to their debt, but also increase what they’re contributing or saving for their retirement. So now, when it comes time to spend money, they already have their goals. They already have their anchor where their money is going to go, and they’re less likely to spend frivolously on an emotional purchase because their emotion is tied to something longer term.
James Derrick 5:31
It sounds like you really helped them out. What? What other services do you offer, as you discuss with clients, anchoring.
Sharla Jessop 5:38
Anchoring can be anything. For some people, it’s having enough savings for their kids to go to college or pay for weddings or other things. For some people, it’s getting into a new home trying to save a down payment. The idea is that we are driven by emotions, and so if we have something to focus our emotions on in the long-term, we can be stronger when the storm comes an idea that we might be swayed, whether it’s because the markets are really volatile, or there’s an election change, you know, presidential change coming, administration changes, all of those things aren’t going to have an impact that are going to create a sense of urgency to make a change. You know, that’s one of the biggest problems that we see, is people often make changes in their plans because something has caused them to feel a sense of urgency. The market is dropping. I hear it on the news. The media is saying that I need to make a change in my investment plan. And the reality is, my investment plan is down the road, and so I’m going to continue to contribute. You know, over the years, I’ve had the opportunity to sit with lots of different people, and especially retirees, and I’ve never had anybody say to me, I wish I would have bought a certain stock, or I wish I would have put more money in this stock, or I wish I would have taken advantage of this market correction. Really, what they’re saying to me are, I wish I would have created more memories with my family. I wish I would have spent more time traveling while I had good health. Those are the things that, types of things that having an anchor allow you to do.
James Derrick 7:12
I’ve learned that some of the distractions of life, including some financial ones, are in the long run, are not the most important things.
Sharla Jessop 7:21
Right.
James Derrick 7:22
Well, thank you for coming in to discuss anchoring and the meaning of money with us today, Sharla, it’s a big topic. Thank you.
Sharla Jessop 7:29
Thanks, James.
Shane Thomas 7:35
Thank you for joining the Power Up Wealth podcast. Smedley Financial is located at 102 S 200 E Ste 100 in Salt Lake City, UT 84111. Call us today at 800-748-4788. You can also find us on the web at Smedleyfinancial.com, Facebook, Instagram, Twitter, and LinkedIn. The views expressed are Smedley Financials and should not be construed directly or indirectly as an offer to buy or sell any securities or services mentioned herein. Investing is subject to risks, including loss of principal invested. Past performance is not a guarantee of future results. No strategy can assure a profit nor protect against loss. Please note that individual situations can vary. Therefore, the information should only be relied upon when coordinated with individual professional advice. Securities offered through Osaic Wealth, Inc., member FINRA/SIPC. Investment advisory services offered through Smedley Financial Services, Inc.® Osaic Wealth is separately owned, and other entities and/or marketing names, products, or services referenced here are independent of Osaic Wealth.
