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I'm Russ, a financial advisor for women based in Atlanta, GA. I guide women to a comfortable retirement, helping them navigate uncertainty and live great lives. Every Wednesday, I write an email letter with my thoughts and perspectives on retirement.

FOMU

"Missing out" isn't the only fear I encounter in my work...

Mar 22, 2023

Good morning readers!

I typically write these weekly letters about a week before they’re published to you.

So it’s not uncommon for “life to happen” between the time I write and the time you read my weekly thoughts.

Last week’s letter was no exception.

I wrote it before all of the Silicon Valley Bank mess hit the proverbial fan.

And what a mess it is!

My take on everything that’s happened is the bank either didn’t realize - or willfully ignored - what happens when a lot of your capital is invested in “safe” Treasury bonds and interest rates start going up.

As I’ve discussed with many of you, 2022 was a painful year to be a long-term, well-diversified investor, because in the face of both rising inflation AND rising interest rates, stocks and bonds both temporarily lost value.

Temporarily is the key word here…

Hang on… that’s not how diversification is supposed to work, right?

But I continue to believe in the idea that, as Meera Pandit of JP Morgan recently shared on a webinar I attended:

Diversification doesn’t work every time, but it does work over time.

And I make portfolio recommendations accordingly.

Including encouraging you to stick with your long-term financial and investment plan despite every fiber in your being screaming at you to just do something.

Anything.

Which brings me to this week’s topic: FOMU

I feel pretty confident that you’ve heard of the concept of “FOMO” or Fear of Missing Out.

In January, Morgan Housel wrote that FOMO is the worst financial trait.

I even touched on FOMO back in this April, 2021 letter.

And while I’m not here to argue about which is worse, I’d like to introduce FOMU as a another not-so-desirable financial trait.

FOMU is the Fear of Messing Up.

And while FOMU isn’t unique to any gender or age group, I see it a lot in my work.

People can often become so overwhelmed with the idea of managing their finances, they succumb to paralysis by analysis and stick their head in the sand.

It’s not that they’re aren’t smart, capable people.

But they have this voice in their head that’s constantly asking them,

“What happens if you screw this up?”

Even after working as a financial advisor for almost 30 years, I still have that same voice in the back of my head asking the same question.

This isn’t about ignoring the voice or moving forward through sheer force of will.

No, this is about finding a way to move ahead while acknowledging the FOMU you might very well experience from time to time.

Here are a few suggestions on how make financial decisions and get on with living:

Start with where you are, right now.

You can’t go anywhere if you don’t know where you’re starting from. So figure out where you are in life, today. What do you own, what do you owe, what do you earn, and what do you spend?
Just figuring out these 4 things will often go a long way to quieting the FOMU in your mind.

Next, decide where you want to go.

Are you planning for retirement in 5 years or are you simply focused on how to pay off your credit card balance?
Sure, you need to know where you’re starting from, but you also need to know where you’re headed. Financially and otherwise.
It’s like the picture on a jigsaw puzzle box.

Now, make a flexible plan.

The important idea here is “flexible.” Best laid plans and whatnot…
And know that you’re plan probably won’t work. Again, all the more reason for it to be flexible. And easy to update & review.

Explore “what if” scenarios for your plan.

What if you get to your destination sooner? What if it takes longer?
What other competing priorities will you have to deal with along the way?
What if you change your mind and want to go in a completely different direction at some point?

Stress-test your plan.

Evaluate how your plan holds up in different environments.
How does it hold up if the investment markets do well? What if markets are painfully bad?
How does it do when inflation is going up?
What if you live well beyond average life expectancies?

Regularly update and reevaluate your plan.

At least once a year, I recommend a pretty thorough update and review of your plan. Twice a year might be even better.
Because not only are investment markets, interest rates, tax legislation, global events, and more always in flux. So is your life. And what you wanted - or thought you wanted - 12 months ago might have changed.

Get on with living.

Just like life, your plan will never be perfect. It will never be “right.”
So use your plan, but don’t let it become your sole focus. Your life is for living, not just for planning how to live.

As long as you’re following the outline above, I’m confident this will put you on a solid path and help you better battle any FOMU you might dealing with.

And always remember, it’s about progress, not perfection.

Financial planning is about striking a healthy balance between FOMO and FOMU.

But that balance, once struck, is never guaranteed.

Churchill said,

“Plans are of little importance, but planning is essential.”

Eisenhower had his own spin,

“Plans are worthless, but planning is everything.”

Hit reply and let me know what you think about FOMU.

Is it real? Does this sound (or feel) familiar to you?

Buying happiness

There has been a lot of research over the years trying to determine whether or not more money = more happiness.

As this Washington Post article references, many have come to accept that happiness begins to level out at incomes around $75,000. But it also posits that more recent research might have reached a different conclusion: