Please don't hold this against me, but I grew up in Southern California. During my formative years, I played basketball and watched the Lakers. I still reminisce about Derek Fisher's 0.4-second fadeaway shot in the playoffs against San Antonio. It was glorious. As much as the Lakers won, it seemed like the Spurs got their fair share of wins against them. Looking back on the competitive landscape in those years, the way each team won was different. Even now, the Spurs are still remembered as the team that perhaps did not have the most talent but certainly had the best fundamentals.
Teams with great fundamentals are all described the same way: boring. Teams with fundamentals are indeed boring to watch. There is no drama and less uncertainty. They run the same old plays repeatedly, and they always work. Perhaps they cause you to doze off in the second quarter, but when you wake up, they are finishing off another opponent by ten points, as they always seem to do. While I admire sports teams with great fundamentals, I also don't like watching them because I watch them for the drama, not the clinic on surgical precision.
While I prefer drama on the basketball court, I like to see as little of it as possible in investment accounts and financial planning. Many people, especially those investing in your crowd, seem to like the drama of investing. From my perspective, most of this crowd makes investing look much more like gambling. In either case, I think nearly everyone would ultimately agree that boring and consistent investments and financial planning would be more appreciated in the long run. The solution you seek is the same one that brought the Spurs championships. Focus on the fundamentals.
If the topic of investing comes up at a dinner party, the conversation will revolve around individual stocks, perhaps a more exotic options trading strategy. Almost never have I heard people focus on how much money they are saving per month and the account type it's in. It's the same as people focusing only on 3-point shooting, with no talk of passing, screening, or sound defense. If you want to maximize the likelihood of meeting your financial goals over time, removing uncertainty with strong fundamentals is the right approach.
What exactly are the fundamentals, you ask? It's everything from credit card usage to 401(k) savings to estate planning. While each topic gets very complex, the basic concepts must be grasped. While your son may want to go out and immediately shoot threes like Curry, the first thing he needs to learn is how to dribble. The good news is that a new book recently published on Amazon goes through all of this. It's not so in-depth that it overwhelms you, but it's just enough to get that foundation of good fundamentals going. Whether you are 20 or 80, knowing and practicing fundamentals is essential to financial planning. To learn more, check out the QR code below. (Full Disclosure: I wrote the book):