Do it Right the First Time

​I am pretty happy this week because our St. George airport has finally re-opened after being closed for runway repairs. Though only a few years old, the runway had become unusable due to damage from underlying expansive soils. The loss of air service, and the high repair costs could have been easily avoided had the runway been built properly in the first place. Site engineers initially recommended procedures to protect against the well-known soil problem, but government officials did not want to spend the money. As is often the case, the cheaper route ended up being the most expensive.
 
It’s common for people to do things on the cheap up front, only to pay a much higher cost down the road. Investors are prone to this same tendency as they resist spending the time and money to get things right the first time. Here are just a few situations I see regularly where people know what they should do but try to cut corners anyway.
 
1 – Not saving enough. I suggest saving 10% of income during the working years, but 5% at a bare minimum. Not doing so when you are young can result in a financially difficult retirement.
 
2 – Not buying sufficient life insurance. Unless you are unhealthy, term life insurance is very inexpensive, while the cost of not having it can devastate those left behind. I married my wife, Launa, after she had been widowed at the age of 22, with two small children. I see no excuse for not having basic life insurance if people depend on your income.
 
3 – Not getting some financial education. If you don’t take the time to learn basic budgeting and investing concepts, the mistakes you will make can be costly.
 
4 – Not being willing to hire professionals. I know more about income taxes than most people, yet I pay a CPA to do my taxes. I have a pretty good understanding of legal matters, but I pay lawyers to do my personal and corporate legal work. I have extensive knowledge of investing, yet I regularly pay specialists to teach me more. Hiring a CFP® professional to help with your financial planning may help you avoid expensive mistakes.
 
5 – Not hedging a portfolio. It’s fun owning an all growth portfolio, until a recession comes. Balance your account with some lower earning investments that are less affected by market swings. It will cost you a little in returns when times are good but may save you from a painful loss when things turn ugly.
 
6 – Not correcting mistakes. Spend the time to review your investing mistakes and learn from them so you don’t repeat them.
 
Nothing looks more beautiful to a weary pilot at the end of a long flight than that lovely runway out the window. Nothing looks better to a weary worker as they approach retirement than a well-planned and properly maintained retirement account. In both cases, success depends on being willing to spend the time and money upfront to do it right.