We’re constantly being approached by our members looking for elaborate financial plans. One which entails precision, and a complicated sub-set of know how instructions to attain one’s dreams, financial objectives, and goals.
In our experience, those that need the leather 1,500 page binder to achieve the financial success they are looking for will fail miserably. As a matter of fact, we have consulted with folks that have come to us with these binders far too often – from the likes of Morgan Stanley, Merrill Lynch, Schwab, and a host of other institutions.
This happened a lot back in the office on Wilshire Blvd. in Santa Monica, California. I remember having appointment after appointment with these people that would come in with their binders held as tightly as could be, and then they’d sit across the table from me disgusted with their lack of progress with their soon-to-be fired financial planners.
These people were meeting with me (usually through referral) because they knew what they were doing wasn’t working with the big financial plan laid out before them, calculated down to the ninth decimal, which in actuality didn’t do anything for them, except collect dust on a shelf and cost them some money.
My routine was the same every time someone walked into my office with one of these leather-bound folders. I would grab the binder, sit up from my chair, and start walking around the room flimsily flopping through their entire financial plan showing virtually no care for it. Once I knew I had their eyes on me, I’d lift it in a baseball-like throwing motion, fire it across the room as if I were throwing a fastball, and aimed it right for the caddy corner trashcan.
The looks I got were priceless. I was yelled at a few times. One woman fell to her knees and began sobbing like a child because she really thought her life belonged in that binder somehow. Some husband stood up and flared his fists at me once and said, “I should knock you out for that.”
Whatever range of emotions transpired as the leather binders ended up in the trashcan, eventually the emotions would settle down. By the time I’d walk back to the chair at the table that sat across from my soon to be clients… I’d just simply say some iteration of, “you cannot put your destiny in a leather bound booklet with exact numbers tied to it – then have your planner put you in a Hodge Podgy list of broken mutual funds, and expect results anytime in your lifetime.”
Folks, this advice is still true today. And even more so. The leather bound plan approach would stifle just about anyone.
I’ll share my rudimentary formula for a successful plan that requires no wasted paper if you decide to give me a call – and it comes free of charge. The really short version of it: you need to become a relentless free cash flow gusher. And begin to invest your free cash savings in productive businesses, and importantly, you need to keep doing it (so often folks lump sum invest, and forget about continually investing new savings, where some serious compounding can add up fast!).
This is the approach Warren Buffett took. It probably should be heeded.
As an aside, there are some complicated trusts, tax planning, and other things of note once you’ve acquired some decent wealth – but it’s still all about keeping it simple. Save money, invest in wonderful businesses, and have the proper insurance just in case. The outcome will highly surprise you when you invest in truly worth endeavors, some of which can be found right here.
So throw away the binders, become a free cash flow gusher, and get involved in owning businesses. That is the road to success from a very uncomplicated plan.
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CEO & Chief Investment Strategist