Twelve simple rules to follow to sound investing for the long term

INTRODUCTION

For many the major concern about investing for retirement is risk.  The risk of losing the capital is the number one concern, however there is another risk that is the risk of losing purchasing power to inflation.  With interest rates at an all time low the inflation risk is very real.  Investing in a non registered GIC  earning less than three percent, the actual rate of return is in the negative.

If the goal is to build wealth long term the only option is to include equities in the portfolio.  Learning how to do that effectively and to do it without loss of capital is the objective of this paper.  Here are the twelve  things   needed  to be a better investor, regardless of how what method of investing is chosen, buying  stocks on your own or use a quality mutual fund. 

1.       Define what wealth means to you

Take the time to think about what wealth means to you and define your goals.  A good way to do this is to begin with the end in mind. What would you like to achieve by the time  your retire?  It may be as simple as defining how much of your salary you want to continue without working.  If that goal is 80% you can now calculate what your savings goal should be every month, with that knowledge you can now begin to determine what type of investment strategy will work best for you.   Keep in mind that your goals should be long term, not only to retirement but to future generations.  Family wealth starts with one person making a conscious decision to create wealth and keep it for generations.

2.       Keep it a secret

Once you know what your definition of wealth is and what your goals are it is important to keep it to yourself.  Don’t allow others to pull down your dreams.  Keep in mind that achieving wealth success takes work,  you will have to apply yourself to succeed.  Measure the results, be patient and stay invested.

3.       Understand your money beliefs

We all carry this baggage about money, the root of all evil etc.  You need to change that belief.  Understand that there are only two things that work people and money. Money invested will eventually give you enough wealth that you don’t need to work.  Learn the principle of the rule of 72 and apply it to you  goals.  (Rule of 72 – whatever the interest rate divided into 72 determines how long it takes to double the original investment)

4.       Wealth is a consequence not a reward

Wealth is a consequence of concerted effort to achieve an objective.  Understand that ten percent of everything you earn is yours to keep.  A good objective is to save 1% of your gross annual income monthly, i.e. if you earn $100,000 a year your goal should be to save $1,000 per month.  Invest first in a savings account, then diversify the investment to stocks, bonds, mutual funds, real estate etc.   Money begets money, that is the magic of compound interest.  It takes patience and it takes courage, especially when the market takes a reverse but over the long term it is always going to rise. 

5.       Diversify to reduce risk.

Diversifying the portfolio is one of the best ways to reduce risk.  It stands to reason, when one sector of the economy is down another will be up.  Diversification may be owning equities, i.e. quality companies,  bonds and guaranteed investment certificates in the portfolio at the same time.  How they are mixed will determine overall rates of return.  

Wealth managers will recommend  a mix of equities and fixed income based on risk tolerance,  a conservative income  portfolio might be 80% fixed income and 20% equities, a moderate growth portfolio would be 60% equities and 40% fixed income and an aggressive growth portfolio would be 80% equities and 20% fixed income.

Having two or three advisors with investments with each is not diversification. In fact it is stupidity, invariably the investments in each portfolio are similar or the same, which defeats the purpose, pick one advisor put everything with him or her and stick with it.  A good analogy is put all your eggs in one basket and then pay close attention to the basket.

Determining risk tolerance is not easy, the problem is that it involves more than just logical objectives, there is a lot of emotion involved, it is just as important to pay attention to your gut feelings as to what seems logical.  A good place to start is to complete a risk tolerance  questionnaire.  The questionnaire is made up of a  series of questions, which when answered honestly will generally provide a fairly accurate risk tolerance equation.  This is a guideline it should be the basis of the discussion with your financial advisor not the conclusion. 

Risk tolerance is not a static condition, you will change your opinions when the forces impacting your decisions change.  Risk tolerance that is focused on a long term time horizon may not be your risk tolerance for the next five years.  Being aware that you will change and being prepared to react to that will make you a better investor.

Armed with a better understanding of this process will allow you to formulate your investment policy statement, which is a statement that reflects what you wish to achieve and how you would like to achieve it.  There are good examples of investment policy statements and most are templates that can be tailored to each individual.  We have included an example as Appendix B.

Risk is also reduced by the length of time the portfolio is invested.  Time does heal all wounds and when there is lots of time the risks will fade.  Investing in equities should not be considered if the time horizon is less than 10 years.

6.       Understanding how the stock market works

My long time associate and business partner Larry Johnson who passed away in 2008  described the stock market as walking up a hill with a yoyo, the yoyo is always going up and down as the hill is climbed.  That is a very good description for over time history has proven that the stock market is always on the rise overall.

The key is to realize that a stock market is like a farmers markets, hundreds of independent vendors vying for the same investors.  If there are lots of buyers the price rises if there are few buyers the prices will go down.  It is a free market and will  fluctuate daily.

There are hundreds of companies listed on two or three dozen exchanges around the world,  that a specific company is publicly traded does not mean it is worthy of investment.  Choosing the right company to invest in requires some research,  and due diligence.  A good investment manager will begin with the financial statement, this is a wealth of information on the companies business model, the principle managers and what the potential for profit and growth is. 

For most people it is like walking into a Wallmart that has thousands of items and trying to determine which coffee maker to buy.  You can buy on price, quality, efficiency of purpose or you can close your eyes and pick whichever one your hand touches.  Probably not the best way to buy a coffee maker it will work however you will probably be back to buy another one in the near future. The alternative is to buy one of each, not a practical solution from a cost perspective and it will lead to some interesting conversations when  you get them all home.

Similarly choosing what stock to purchase from the thousands listed on the stock exchange can be as daunting a task.  Buying everyone is normally not an option and making the wrong choice can be expensive. 

Most of us will start with what we are familiar with, if we recognize the coffee maker brand and have had past experience with that brand that is probably what will influence our decision if the price is right.  Investing in the stock market is exactly the same, if there are 50 financial services companies to choose from and they all look the same we are probably going to choose the one we know because they have a branch on the corner downtown or that is where we bank.  To get out of our comfort zone and invest in something we don’t know that much about is not the objective.  The objective is to  bring that specific company into our comfort zone by learning as much about it as we can before we make the final decision.  If you are very familiar with Black and Decker but want a bit better quality coffee maker that will last five or ten years instead of three or four you will need to learn more about the alternatives.  That is doing your due diligence, you do that every day when making purchase decisions large and small. The same principle applies to purchasing or investing in a stock.  However the good news it you don’t have to do all that, you can hire a reputable fund manger to do that for you, someone who does it every day and who loves his job and is good at it.

I am pretty sure you don’t fix your own car or do your own dentistry.  Most of us have the good sense to recognize our limitations and hire professionals to look after these things for us. We also don’t even give the cost of these professionals a second thought it is the cost of having it done right the first time.  The same thing applies to investing, if you don’t fully understand the stock market or have the skills and time to develop the skills to be a successful investor why would you even consider it, doesn’t it just make sense to hire a professional to do it for you?

7.       What is a stock market index and how to understand it.

Probably the least understood and the biggest threat to long term investing is the stock market index.  The index,  of which the Dow Jones Industrial Average is the oldest and most famous is something that was created by two newspapermen, Dow and Jones in order to publish in their newspaper, the New York Times a measurable index of how the market was doing on a daily basis.  They chose 30 stocks, those 30 stocks have changed over the last 125 years or so but it still remains the average daily value of 30 stocks.  Similarly the TSX index measures the average daily price of a basket of stocks on the Toronto stock exchange.

No other free market in the world has an index.  When you walk into Safeway to buy groceries you don’t stop and check the poultry index or the dairy index.  But lets consider for a moment what impact a grocery index would have on your purchasing decisions.  Lets assume that this grocery index contains,  bread, milk, eggs, beef, potatoes, tomatoes , coffee and sugar.  For the purposes of this illustration we will assume the average index price of the seven items is  4.55 today.  Tomorrow however a huge supply of coffee arrived and the coffee price was halved, the effect on the index was that it dropped 45 cents to 4.10.  You have noted the drop however you don’t need coffee and  only three of the other six items on the index, all the rest of your grocery shopping will be for items not including in the index.

Did the index influence your buying decisions?  Did it make a difference in what you spent, or was it just an interesting number that had no meaning whatsoever in how you purchased  your groceries. If you decided to stock up on coffee then perhaps it would have made a difference in your buying decision but that is about the only benefit it could provide.

You would ignore the grocery index, similarly the stock index has no value to an intelligent investor and should be ignored at all costs.  Every market panic in history has been caused by the index not be intelligent investment decisions.  If someone refutes what I have just said I personally would run in the opposite direction as fast as I can with my capital safely in the bank.  More investments have been lost because of paying attention to the index instead of paying to attention to good sound investment principles and investing in quality companies for the long term.

If you invest in a specific company or a value mutual fund which has companies that pay consistent dividends year over year regardless of the stock price and you reinvest those dividends in that company year over year with no regard to the day to day price of the stock, then   you have benefited from the index.  When the market price is depressed your dividend bought more shares and when the market price is higher you had a capital gain.  Herd mentality does have an effect the key is to stay out of the herd, which starts by investing in companies the herd has no interest in.

8.       Choosing value companies to own.

If you do decide to invest in the stock market and manage your own portfolio you must have a plan on how  you are going to choose the companies to invest in.  On the other hand if you plan to hire a professional manager through a mutual fund you still need to understand the key principles for choosing value investments. 

Value investing is picking quality companies that pay consistent dividends and that have potential for capital growth. Value investors, professionals and individuals alike choose companies that meet specific criteria.  These four steps are excellent simple rules that lead to success.

a)      The companies have to be hard to duplicate, a good example is CP or CN Rail, there is very little chance that Canada will ever have another national railroad, it would be just too expensive to purchase the land necessary to build a railroad across the country.  That is one of the reasons that Warren Buffet owns Burlington Northern Santa Fe.

b)      They should have a good track record of paying dividends and consistently increasing their dividend distributions annually and hopefully will have a dividend reinvestment program in place.

c)       They have potential for growth which will increase the capital value of the company over time.

d)      Be in areas that the investor is familiar with.  It is worthy to note that Buffet does not own a lot of companies outside of the US, with the exception of Canada.  He tends to invest in companies he is familiar with and that meet the first three criteria, following his example is not a mistake.

A good example of how Buffet has applied these criteria is his decision to invest in American Express in his early years.  Standing at the cash register at his favorite steakhouse in Omaha and noting that regardless of the state of the economy customers still ate out and paid with their Amex.  That isn’t a scientific analysis of American Express.  It is applying common sense, which of course has paid off for Berkshire Hathaway very handsomely  in the years since.

9.       Reinvest dividends

Dividend reinvestment compounds the rate of return.  It is the magic of compound interest what Einstein once described as the eighth wonder of the world.  Understanding  how compound interest works is essential to long term investing results. 

It is important to know the rule of 72 and how it works.  The rule is that whatever the rate of return divided into 72 will indicate how long it will take for the initial investment to double.   If the rate of return is 2% it will take 36 years to double, if the return is 12% it will take six years and if the return is 6% it will take 12 years.

To illustrate $1.00 invested at six percent takes 12 years to double,  that is go from $1.00 to $2.00 but it only takes six years to add one more dollar from $2.00 to $3.00 and only three more years to add one more from $3.00 to $4.00 .  The problem is that first 12 years are boring, getting through them requires patience.  Unfortunately if  boredom prevails   the starting point is where the investment is today it’s at square one again.

Helping avoid boredom is the task of the financial advisor, and one of the best ways to avoid it is to invest consistently every month; month after month for the long term. 

10.   Invest regularly

Consistent monthly investment is the best defense again the risk of loss, it multiplies the effect of compound returns,  and increases the long term capital gain.  A good rule is to save 1% of gross annual income monthly, that is a bit more than the 10%  that is the rule of thumb which will make up for lost time.  For example  a $100,000 annual income sets a savings goal to $1,000.00 per month.  That figure can be reduced by CPP premiums, pension contributions and other savings.  It is a goal and it can take time to achieve.

11.   Patience

The society we live in today is one where instant gratification is the biggest demand.  We don’t want to wait, we will borrow to purchase what we want right now.  That is why so many will purchase lotto tickets or go to the casino and shove dollar and dollar in the slot machine, always looking for a fast buc.

Unfortunately building wealth requires infinite patience, there is no easy way to get where you want to go and consistently eliminate the risk.  Staying invested for the long term is the only solution.  So what defines long term?   Think lifetime and then some,  rather than just your lifetime what about the lifetimes of your children and their children. 

12.   Get good Advice

If the objective is to invest personally, purchase a few quality companies and stay invested long term then the best solution is a discount brokerage firm through your bank.

However this does required time, if that is a problem then getting a good advisor to assist with the decisions and using a quality mutual fund will make sense.  Advice does cost  however it can be kept to a minimum.  Quality funds should not cost more than 2.05% per year.  The advisor will receive 1%  of the fee which is a reasonable amount to be paid for advice.   Many advisors will reduce the fees if the portfolio is more than $250,000 and often an additional discount for portfolios over $500,000.

You! The One Driving the Car

We just spent the day volunteering as traffic control for the Kootenay Rockies Gran Fondo.  The KRGF is an annual event that gives bike riders a chance to ride around the East Kootenay, there are three events, the Gran Fondo 196 K, the Medio  105k and the Piccolo 60K.  It is a fund raiser organized and conducted by the Cranbrook Sunrise Rotary Club. This year there were 375 riders ranging from age 6 to 80.  There were in addition 125 volunteers who looked after the aid stations, traffic control and a host of other services.

You would think for the most part that the majority of people on the road would take the inconvenience of having to stop and let a group of bike riders make there way through an intersection as nothing too serious and a minor interruption to the day.

 It was Saturday and there were no real emergencies so why would someone come unglued swear at the traffic control individual and ignore the stop sign and actually drive through the intersection endangering the lives or a rider?  Do other lives mean that little?

What are the consequences of ones actions if in fact they did injure a bike rider by failing to obey the traffic control person?  1. Driving privileges are lost immediately. 2. A traffic offense chargewould be laid  and if  the person on the bicycle died the charge would be Vehicular Homicide (manslaughter) and could that could lead to a jail sentence. 3. But the problems would only have just begun, the rider or the family of the rider would sue for damages, the insurance company may or may not defend the case depending on negligence.  Whatever the insurance company decides the end result is probably bankruptcy within six months. 4. How does all this effect the rest of the family? It could lead to  job loss, loss of the family home and savings.  How will the family react? Will the spouse and children be sympathetic if they no longer have a house to live in? 

You have probably have never given any of this a lot of thought. That's fine, that is your prerogative, but the next time you decide that you can drive at 110k instead of 100k or pass without thinking, or disobey a traffic control person, maybe you will think about these things and decide to slow down take a pause and ask yourself if it is really important that you get there in five minutes or ten.

Sadly this summer there have been fatalities in accidents between bikes and cars here in the Kootenay's and the criminal trails and law suits have begun. What a horrifying way to have your vacation come to an abrupt halt because you never paid attention to the bike rider in the on coming lane as you decided to pass. I fell sorry for the family of the biker and I feel sorry for the family of the car driver who will suffer imeasurably for an action that could be avoided just by slowing down.

I truly hope that everyone will take a moment to just think before they act.

Why, start with Why? Part four

Why, start with Why?

Colin J. Campbell

Part Four – Some Tools for success – these are simple ideas that can be incorporated into daily routines that will make the job of success easier.

Me, Inc.  -  This idea comes from Col. Rolf Smith and was introduced in Part two.  If you are not incorporated as a business entity you may want to consider doing that soon, but also you want to think of yourself as an incorporated entity, (whether you are incorporated or not) Use this mental concept to your advantage to find solutions and help set goals.

SWOT Analysis – Determining your Strengths, Weaknesses, Opportunities and Threats, another of the concepts that was emphasized by Jim Collins in his books Good to Great and Great by Choice that can be applied to just about every situation and will help determine what the plan of action will be. If you are not sure about your strengths you can take an online quiz for free that will help.

Creating a procedure to solve a problem - Peter Drucker, the father of modern business management, said that if you have a problem, create a procedure to deal with it and you no longer have a problem.   That is a good lesson to keep in mind regardless of what you do.  If you grasped the concept of Me Inc.  you are going to treat  yourself like a business and when you do that you can see how the lessons learned from men such as Drucker can be applied to your life regardless of what  you do from a career standpoint, whether you work for someone else or if you are the entrepreneur that creates the business model and sees it to success.

Develop your business plan -  The biggest hurdle for Me Inc. is going to be financing the idea. You can turn to friends and family to help and you can go to institutions such as Community Futures, BDC, Credit Unions and Chartered Banks. 

The first thing they will ask you for is your business plan.  This is your pro-forma of what you think your business will generate in income and what expenses you will incur and of course how you are going to pay them back for loaning you money. There are templates you can use to create these, both Community Futures and BDC have them just Google those two and they will be readily available.

Several organizations such as Community Futures provide courses for little or no cost on business management techniques and how to secure financing for projects.

Become a student of great management books -  You can download for free many of Peter Drucker’s textbooks from the Drucker institute. Others you should be reading are Jim Collins, Amanda Lang, Arianna Huffington, Chade-Meng Tan, Simon Sinek and Malcolm Gladwell to name a few.  You can take free courses or sign up for free newsletters from Stanford School of Business, and other major business schools. Many top universities offer free on line courses that help develop the skills you will need, take advantage. Subscribe to Inc Magazine, you can get it in the print format or on line, another great source of material on developing business skills.  Subscribe to Ted Talks, its free and you can get an amazing education at no cost.

It’s not what you earn but what you keep that is important -  If you can grasp this one concept your success will be assured. Unfortunately you didn’t learn this in school.  Ten percent of everything you earn is yours to keep.  This should be a rule that is never broken.  If you receive a paycheque, or if you are self employed it doesn’t matter, take 10% of every dollar earned and invest it. Start with a savings account and from there move to other investments. Put it somewhere where you can’t touch it.  This is not an account to accumulate your Vegas holiday money, this is accumulating the wealth that you hope will allow you to not work in the future.

Ninety five percent never learn this one skill and they always work for the five percent who did. It doesn’t matter what your source of income is, you have to save the first 10% and invest it in something that will generate income for the rainy day or for your old age.  Get a good advisor, advice will cost, but it is worth it, if you pay an advisor 1% and he or she makes you 7% and helps you survive the inevitable rough patches along the way then that is money well spent. 

Your banker is not your financial advisor - This is important, the banker is the financier of your business, their job is to make money for their employer.  They do not have your best interest in mind when you borrow money from them so why would you ask them for advice?

Learn the rule of 72 -  Another one of the secret formulas that you didn’t learn in school.  The rule of 72 says that whatever the interest rate is, divided into 72 determines how long it takes for a dollar to double.  Or conversely how long it takes to pay back one dollar borrowed.  It is the principle of compound interest, what Einstein described as the eighth wonder of the world.  If Einstein thought it was that important don’t you think it might be a good idea to pay attention to it as well?

Here’s an example of the impact of compound interest on Me inc.  Let’s assume for a moment you have taken my advice, you are saving 10% of everything your earn and you are earning 6% on your investment.  Therefore when we apply the rule of 72 that means that for every invested dollar to double to two dollars takes 12 years. (72/6= 12)  However it only takes six years to add another dollar and three  to add another dollar and 18 months to add another dollar. That is the magic of compound interest, if you have patience, stay invested, never touch the investment, reinvest the earnings and consistently save the 10% every month,  it won’t be long before your investment income will equal your earned income.

The problem and why you need an advisor is that the process is boring and  you will be tempted to go looking for a greater rate of return which means you have to start over and instead of a  nice steady growth it is more like skiing in a mogul field up and down, up and down.  Having an advisor protects yourself from your own boredom.

Manage risk -  Me Inc. is a money machine, you will generate income by some means. You insure your house and your car against loss, you need to also insure your money machine, i.e. You,  against living too long, dying too soon or becoming disabled. This doesn’t have to be expensive but it is necessary, it provides the means for those who depend on Me Inc. to carry on.  It can also means that all you have worked to achieve will remain in place even if you can’t be there.

The five list - This simple idea can make a difference, it is not a to do list.  Charles Schwab, the President of US Steel paid $5,000 for this idea in 1900.  Toyoda taught it to all his executives.  What works for them will be invaluable to  you.  At the end of the day before you leave the office, or if all else fails before you go to bed, write down the five things you are going to do tomorrow.  No more than five, you can’t handle more and you don’t want to confuse your subconscious mind.  It’s that simple, you will be amazed how much you get done and how many will already be solved when you wake up.

A good example of this is my own personal experience. I like to set aside a morning a week to work on my business not in my business.  It doesn’t always happen but I do try to schedule it.  Before the end of the previous day I always try to write down the five things that need doing the next day.  One evening I wrote down that I needed to write three letters, they were important letters to be mailed to clients.  I set aside the next morning to get this done, knowing I had an appointment that I had to attend at noon. 

The next morning I was awake at 5:30 AM, the letters were written by 6:00 AM! It was amazing, the words and ideas just flowed, in no time at all the drafts were done and forwarded to my two associates for comment and input. That left me with six hours free for other pursuits. 

The Five Why Questions -  Eiji Toyoda the founder of Toyota Industries which is the parent company of Toyota Motors developed a concept that he maintained would find the solution to every problem, simply by asking the question why, five times.  He taught all his executives to use this problem solving method, you may want to incorporate it into your own procedures.  It will have amazing results.

Asking the question “How to…..”   This simple idea allows you to define the relevant word in the problem and that will lead to more effective solutions.  For example, “How to come up with a solution?”  The “a” is the relevant word, it blocks the solution by implying that there is only one solution when in fact there may be many solutions. 

Take time to smell the roses -  If you are working more than 60 hours a week on Me Inc.  you are sacrificing either your family time, recreation or sleep.  You cannot sustain that pace without something coming apart, your health, your family or your sanity.  You have to maintain a balance, it is essential and you will be more successful if you will not sacrifice these other important facets of your life.  Arianna Huffington, the founder of the Huffington report talks about her own experience in the book Thrive, you can also find an interview with Arianna at Inc magazine where she talks about her own experience and the impact of overwork on her life.

Sharpen the saw -  Take time to attend seminars, study , take courses, or just to read a good book.  Staying sharp is essential to your success.  The analogy is to a lumberjack, he will cut more trees in a day with a sharp saw than he will with one that is dull.  The only way that he can maintain optimum performance is to take the time to sharpen the tools.  This same principle applies to you regardless of   what you are doing. 

Be patient with yourself - There are no unrealistic goals there are only unrealistic expectations.  It doesn’t matter what we decide to achieve in life the road to success will be long, filled with twists and turns and expectations will often be that more can be accomplished with the time allotted than is possible.  That does not mean that the goal is not worthy it is just takes more time to achieve.  The example of the Wright brothers and their determination to make absolutely sure that when they finally did demonstrate to the public their ability to fly there was no chance of failure. Despite the fact that politicians and the press were constantly maligning them as frauds and cheats for not being willing to provide proof of their achievement. The best antidote is to start with realistic expectations in the first place and to be very happy with the results.

Mindfulness- Learn to meditate, you can find a number of website’s on the subject by searching Mindfulness and by reading Search Inside Yourself by Chade-Meng Tan.  It is simple as sitting quietly and focusing on how your breath for a few minutes every day.

Take the step, Start with Why and enjoy the journey. 

Colin J. Campbell, CFP, CLU, Ch.F.C. is Managing Partner of Guidance Planning Strategies Ltd. in Cranbrook BC  he can be reached at colin.campbell@gpsbc.ca

Why, start with Why? Part Three

Why, start with Why?

Colin J. Campbell

Part three – How – Achieving Success

Asking yourself the question “Why” is a novel approach; for most of us we haven’t done that since we were little children.  If you have followed the first two parts of this article, defined your why and begun to set down your goals you are now ready to take the next step, “How”.  How is the implementation phase.  Taking action, it is an essential requirement.  Unfortunately, not everyone has the opportunity to see their dreams become reality. The dreams of childhood get shelved by the reality of life. Trying to earn a living, raising a family and educating children consumes  most of our days and leaves little time to dream or to make a dream reality.

Finding your why, setting goals and becoming more innovative are keys to all facets of life.  Seeking to find happiness in a career and lifestyle are part of our makeup, we expect to achieve these goals. We are all burdened by the baggage of our upbringing and education.  To move forward we have to get out of the  present circumstance, the only way to do that is to step forward and take a risk.  That does raise the possibility of failure, however failure is not the enemy, failure proves what doesn’t work.  It is not a stigma it is a stepping stone.  Not being afraid to fail is self compassion. You have to like yourself and what you are trying to achieve.  We are often our own worst critic, we expect perfection when perfection is an elusive dream.  Be willing to accept who you are and what you have achieved.

For many the biggest fear is fear of failure, it leads to inertia.  It is a trait that was learned, our education system with its rewards and punishment taught us to fear failure, fortunately it can be unlearned.  The best way to deal with this fear is to face, it move towards it until it loses its hold.  Many entrepreneurs will say that the fear of failure held them back but when they faced up to it, quit the comfortable job and stepped out on their own the fear disappeared and the act of taking action empowered their success.  When there is no fallback position and the only direction you can take is forward it is amazing what you can achieve.

Action is delayed by fear and learning how to identify what is causing the fear and how to deal with it is very important to success.  Fear is an acronym for False, Evidence, Appearing, Real.  Dealing with this unreality can be a simple as taking the first step forward, and the false evidence will lose its hold.  A good analogy is the efforts of a mother eagle to get the eaglets to fly. Some of them will be eager to leave the nest and with a bit of encouragement from Mom will take the leap and fly right away, but often there is one who just doesn’t get the message and will not leave the nest. Mom will encourage and cajole until finally she will solve the problem with a good kick in the rear. Once the eaglet realizes that its fly or sink the problem is solved. Similarly sometimes we need a good kick to  overcome the fear. Often those with the skills and the talent never succeed because of the fear of failure, while those with lesser skills but the determination to face the fear and move forward succeed. 

If you study the lives of the great achievers in history men such as Edison, Einstein or Bill Gates, the one commonality is a very active minds as children, they dreamed big and they were encouraged by a parent to try to achieve their dreams. Their parents were not inclined to step on their butterflies no matter how outrageous they may have sounded.  What these men accomplished in life and the impact they have had on our society is immense, they literally changed the world.

Nothing is impossible.  Whatever your why and your what you can accomplish if you are willing to do what is necessary. You may have to develop new skills to achieve your goal. It is estimated it takes 10,000 hours to become an expert at something, such as playing the piano.  If you were to chronicle the time that Bill Gates put into becoming a very proficient programmer you would probably find that the time invested was about 10,000 hours.  He chose to start early and give up a lot of other activities to achieve the goal, such as sleep. It is estimated that Thomas Edison tried over 5,000 experiments that did not work before he succeeded in developing a light bulb that would work for any length of time.  In terms of time, about 10,000 hours.

Can anyone become an expert at anything by investing 10,000 hours? No, it requires some talent and aptitude for the task.  Which emphasises the importance of Why, until you know your Why it is hard to decide where to put the effort.  At the same time that does not mean you should not take the first step, every great achievement began with feeble forward steps, just like when you learned to walk.  Getting started sometimes is the hardest part, it takes more energy to get the airplane in the air than it does to cruise at 30,000 feet.  The same principle applies, much of the skills you are going to need will be learned by doing not by taking courses or attending seminars,  the doing leads to learning.

How you achieve your goals and fulfill you why is taking action to make it reality and it does not have to be daunting task. Success requires courage, you may have to sever the ties with the old ideas and with the safety net that will catch you if you fail.  If you goal is to be self employed, you will need to develop business skills to develop the business plan and find the financing. Part four has a number of tools you can tap into and of course you can find just about anything on the internet.  Developing a business may not be your goal it may be that your goal is to find a better career path.  Post secondary education is expensive however with careful research you can find a number of opportunities to reduce the cost, the online universities already mentioned, scholarships that never get paid out for lack of applicants, grants, work share programs and many more.  It may be possible to find a company in your field that will hire you and pay you while you get more education. 

Thomas Edison once said that the Universe was the source of all his ideas, it was there waiting for him to get in tune.  That applies to all of us, we can all tune into the universe and it will supply all your needs. Getting in tune requires giving up some of the fallacies that have been foisted upon you over the years, the how instead of the why.  Learning to embrace failure as a step to success. Learning to listen to your inner self and allow yourself to dream.  Taking on the idea that you are Me Inc. and treat yourself in a manner that success becomes common place, all because you know what your why is and you have mapped out your plan.

Finally remember the golden rule, Do unto others as you would have them do unto you  and be grateful for all that you have,  gratitude is the antidote for lack, for if you are grateful for what you have you will be rewarded with more, even if all you can find to be grateful for is the air that you breath.

Always remember, “ You don’t get a prize for finishing first in Life.” Rod Osiowy

Colin J. Campbell, CFP, CLU, Ch.F.C. is Managing Partner of Guidance Planning Strategies Ltd. in Cranbrook BC  he can be reached at colin.campbell@gpsbc.ca