planning Archives - Bare Wealth Advisors

by Ron Bare

Early in my career I remember hearing that it is wise to plan for the “Certainty of Uncertainty”. As a financial advisor, this really resonated with me. Reflecting on that phrase now, after 30 years of experience, including various times of uncertainty, I firmly believe in the truth of that wisdom. When economic or market uncertainty is elevated, we believe in the importance of going back to values and principles to help you make wise financial decisions. And here at Bare Wealth Advisors, we believe the best values and principles to apply are those that are grounded in Biblical wisdom. Here are a few to consider during times of greater uncertainty:

Think Long-Term. A long-term perspective is very important to consider when thinking about investment decisions. The longer your perspective is, the better financial decisions you will typically make. Investing in the ownership of companies (which is what you do when you invest in the stock market) carries risks of economic and financial events. When you step back and look at the long term, investors are often rewarded for the risks taken. (Proverbs 13:11, 28:19-20)
Diversify your investments. In our planning process we intentionally build our portfolios across various industries, sizes of companies and countries to help ensure diversification. We use various professional managers with many years of experience. In addition, we typically hold 5+ years of cash needs (or income) in more conservative investments that are not subject to as much market volatility in the short term. This allows investors to apply principle #1 – think long-term. (Ecclesiastes 11:1-2)
Minimize debt. When a company or individual has minimal debt levels it reduces risks to their overall plan and future when uncertainty happens. (Proverbs 22:7, 26-27)
Increase Generosity. We talk a lot about generosity at Bare. We believe being generous is one of the most important biblical principles to apply to our finances. Generosity takes a step of faith, it helps us to learn to trust God and be grateful. When we live with open hands and are generous to those in need, we are reminded of how blessed we are. Times of uncertainty are great times to consider how to be a blessing to others. (1 Timothy 6:17-19, 2 Cor. 9)
Increase Margin. Financial margin can be vastly underrated. When you have margin in your monthly income and margin on your balance sheet it gives you a chance to take advantage of market volatility. Most people have heard the phrase “buy low – sell high,” but many are not prepared with margin to implement this when opportunity arises. (Proverbs 6:6-8). A good way to increase margin is to live within a budget to ensure that you have excess money to save and invest each month. Additionally, it is helpful to hold some cash in a reserve account for unexpected expenses as well as unexpected opportunities.

As always, we are here to talk to you about your personal financial and investment plans. We care about you and your family and remain committed to helping you steward your resources according to your God-given purpose; assisting you to make a significant difference in this world! I will leave you with a few quotes from two famous and successful investors:

Warren Buffet – “If you aren’t willing to own a stock for 10 years, don’t even think about owing it for 10 minutes”

John Templeton – the four most dangerous words for an investor “This time is different”

by Ron Bare

Perhaps the most common mistake made when making investment decisions is making ANY investment decision outside the context of a written financial plan based on your goals and values. That is why Bare Wealth Advisors does not create investment portfolios for our clients without a plan.

Without a plan we are left to the news headlines and predictions from all the market “experts” – most of which are fear driven. Fear is a good salesperson, and financial journalism is guilty of “selling” the headline that will generate the most clicks. We believe wealth is ultimately a resource entrusted to us to maximize the impact and calling God has given us. We should never succumb to fear headlines and financial journalism’s goal of making short term investment decisions based on what the market may do over the next few months.

As Ecclesiastes tells us, “nothing is new under the sun.” Over the past year we have seen the following: war, inflation, rising interest rates, recession fears, supply chain constraints, and most recently the failure of Silicon Vally Bank (a tech focused bank which had heavy losses the past year). All this on top of coming out of a closed economy due to the Covid 19 pandemic, can be exhausting and emotional – however, none of these are “new under the sun!” We live in an uncertain world and one benefit of a financial plan is to help you plan for what we call the “certainty of uncertainty”.

Our advice is and always will be the same – think long term, diversify, minimize debt, live generously, live within your means, and create a tailored financial plan based on the individual values, purpose, and goals your family has established. However, in the meantime let me share a few thoughts regarding our current economic state.

There has been much discussion recently regarding the cause of the inflation we have been experiencing. Basic economics tell us that when you create too much of something the value of that something is reduced. The total M2 (money supply – or simply just think money in all bank accounts) increased by 40% during a two-year window of the pandemic. (Over $6 Trillion!) For perspective, the normal increase in M2 is about 6% per year. It does not take a rocket scientist to figure out this may reduce the value of money (the definition of inflation). The good news (of course nobody is focusing on any good news) is that M2 has decreased over the past 12 months and many leading indicators are showing that inflation is subsiding. It will take some time, but inflation is heading in the right direction – lower!

Remember, even though some indicators show inflation is declining, it is always challenging to predict what will happen in the “short-term.” More importantly, short term is not where we or you should focus. We are long term planners focused on the impact your resources can help you make over the next 10, 20 or 30 years!

As I wrap up these thoughts, I would like to encourage us all to make sure we receive the proper “inputs.” Begin with the NEVER changing word of God (Bible), understand the principles of truth and ask for wisdom to apply them to your life. Then surround yourself with advisors that know and care about you, listen to you and share your values, and can help you discern how to apply wisdom to the vision and impact God is calling you and your family to make – in this short life we have been privileged to live. Thank you for allowing us at Bare Wealth Advisors to be one of your trusted advisors, we are honored!

Tag: planning

Planning for Uncertainty

Nothing New Under the Sun