Financial security can be evaluated in a number of ways however, I believe it all comes down to achieving peace of mind during your retirement or next phase of life. It means that you have no fear of not being able to meet your expenses (expected and emergency) and have the resources to enjoy a happy and productive lifestyle.Retirement expert Mitch Anthony summed this up by stating, “The only two things in life you need are enough purpose to get out of bed in the morning and enough money to sleep well at night.” There is plenty of content on our site about finding purpose so let’s concentrate on the money part.

One aspect of financial security is the specific assets you have in areas like bank accounts, pensions, investments, social security, and so forth. But financial security also refers to your state of mind – how secure you feel. This can be very different from how secure you actually are. Some people feel quite secure with a few hundred thousand in net assets, others feel vulnerable with millions in the bank. Still others derive their sense of financial security from their ability to generate income well into their 60’s and beyond.

What Has Worked For Me

I’m not a financial adviser and you can get plenty of good (and not so good) advice from those that are professionals in this area. However, while steering clear of tips about specific investments, I will share what has worked for me and others I coach.

  • Do your homework. Many of us wish that we hadn’t taken advice from a seemingly knowledgeable expert without getting a second or third opinion. Before I learned the beauty of online research, I sunk significant sums (at least they seemed so at the time) into investments that were “guaranteed” to soar. You know the rest of the story – these investments did the opposite of soaring. Had I been better informed and more conservative with my investments in the early days, this would have helped a great deal over the long-term.
  • Never buy an investment over the phone. Yep, this advice comes from my own poor choices. Twice, I purchased investments from telephone reps I didn’t know – once gold and once stocks. Both of these incidents happened a few decades ago, and they still sting. The better the story, the less likely it is true. When in doubt, say NO.
  • Live below your means. Every dollar you don’t’ spend is one that you have available for investing or to cover future expenses. Why buy the $60,000 status symbol car that is no more reliable and comfortable as the one costing $20K less? Why spend $200 on a restaurant meal when you can come away just as full, and almost as satisfied, for half the cost. Not to say you should never splurge, but just don’t make it a habit.
  • Keep working. I’ve done a lot of research into social security and retirement investing options for my wife and myself. The bottom line on both is that the longer one works and delays taking social security, the more the value of your investments and social security annuity can accumulate. A couple to a few extra years of working can help keep your finances and mind in great shape.
  • When it comes to investing, simplicity usually beats cleverness. To quote from an article in CNN Money, “A more effective approach is to build a straightforward portfolio of broadly diversified, low-cost index funds and ETFs that jibes with your tolerance for risk and that allows you to participate in the long-term gains that the stock and bond markets have historically offered. And once you’ve created a stocks-bonds mix that’s right for you, you should largely leave it alone except to rebalance periodically to restore your portfolio to its original proportions.”
  • Diversify your investments. The vast majority of us will benefit from a diverse portfolio of financial and non-financial investments. Putting all your eggs into one financial basket can sometimes pay off, but this is not the safe way to invest.
  • Don’t buy a timeshare. I talked above about buying investments over the phone. Perhaps the only thing I regret as much is purchasing a timeshare. Yes I know that they work for some people, but there are many others that regret the purchase, cannot get the exchanges or weeks they want, and have to sell for pennies on the dollar, if they can sell at all. Our timeshare sales rep made many compelling promises, none of which came true and none of which were in writing. Like I said about investments, if it sounds too good to be true, it is not true. And no, the goodies they give you for sitting through the high-pressure sales pitch are not worth the agony of living with a timeshare you come to despise.
  • Don’t go overboard on speculative investments like collectibles, futures and angel investing. Diversity can certainly include investments that are a bit on the speculative side, but keep these to a modest part of your overall portfolio. I enjoy a bit of angel investing because it’s interesting and can be immensely helpful in launching new ventures. However, I understand the risks involved and make sure the upside potential is strong and the downside is manageable. By downside, I mean that I won’t lose sleep if the entire investment is lost. Yes folks, it can happen.

Financial security is one of our five pillars of a successful retirement – the other four are good health, a sense of purpose, a supportive community and a positive mindset. All four of these other pillars can be enhanced with financial security so make sure you give this one sufficient time and attention.

Find more great ideas for achieving financial peace of mind.


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