All planning discussions begin with the ridiculous question “So how much do you think you will need 25 years from now?” And thus many people have been convinced to continuously send all of their existing money and any new money that becomes available into the future. This thinking means that all investment strategies revolve around long term accumulation and not around cash flow.

But you can’t live in the future; you can only live in the present. It is also only in the present when you can be in control. However it is often governments and institutions that end up controlling the use of your money. This happens when you are using an ‘outside-in’ approach where your goals are focused solely on return-on-assets (ROA). A real financial plan gets you back in control by using an ‘inside-out’ approach where your goals are more balanced and focused on return-on-life (ROL).

Look at it this way. Any potential investment is analyzed through a discounted cash flow method, which demonstrates that a dollar in your hand today is always much more valuable than a dollar promised to you 10 years later. This is because you have the opportunity to do many things to increase the value of your dollar for the future. I maintain that this day in your life is also much more valuable than a day promised to you 10 years from now. This is because you have the opportunity to do many things like build relationships, create new memories, and have experiences that will increase the value of your day for the future.

Everyone needs a thesis. Your thesis is a belief. It is important so that a strategy and a plan of action can be designed. When it comes to investing my thesis happens to be growth in developing countries.

The biggest casino in the world is not in Las Vegas, it’s in Macao. The fastest growing movie industry is not in Hollywood, but in Bollywood. The world’s tallest building is now in Dubai. There are 2.8 million millionaires in China, a figure which is rapidly closing in on North America’s 3.3 million. The biggest mall in America does not even make it into the top ten in the world. India is building what will be the world’s biggest refinery.

Why is this important? Because, while the more established economies have been contracting, the other 5/6 of the world is doing fine. GDP growth rate for India and China has hovered around 8 percent, while North America and Europe are closer to 2%. Investing in emerging markets is like buying into America in 1900. There will be lots of wild rides, a fair share of failures, but there is also virtually unlimited possibility. There are 5 billion new consumers out there in these parts of the world, and they are a hungry market.

The growth thesis suggests that these markets will counteract the dips elsewhere. There is potential for these new economies to experience ten years of growth that should surpass anything we have seen yet. It may take a different shape or be in an unexpected place, but the opportunity is there.

Many people and organizations want things to be complex. They make a living from it. The financial services industry is notorious for this. When investors seek advice they often get a complicated array of math, worries and theories. What they really need are suggested solutions that can be easily understood.

One time I asked a good friend and a very successful entrepreneur what his secret to success was. He told me his method was simple. “Every day I go out and try to roll this big rock up the hill a little bit further. Some days I push it two feet, and some days it slips back a foot. I’m not sure how high the hill is or if there is another hill beyond it. And it doesn’t matter. What matters is that I am moving ahead. I have goals, I have a plan, and I do a little more each day.”

This is a profound approach to life, and to investing. Keep it simple. We make life harder than it has to be. There is no reason to put ourselves on the endless treadmill of worry, anxiety, and market-based fear. Keep it simple, and keep pushing that rock up the hill bit by bit. You will get to your goals if you keep moving forward.

There are times in everyone’s life when a light comes on. It isn’t always a brand new light, it can be a light that you’ve seen before but for some reason has been forgotten or overlooked. I had such a light come on recently at the annual seafood fest held by the Kingston Construction Association. It is amongst entrepreneurs that you get to hear the real stories of risk, hard work, and sacrifice. As I listened, it struck home once again that this is where true wealth is created and true experience comes from.

Ironically it happened to be in the heart of the municipal election campaign, a time when politicians and bureaucrats would have us believe that they actually create wealth. But the experienced business owner knows different. You see, the best definition of wealth creation is moving resources from a lower to a higher level of productivity. The opposite effect can be seen throughout government. Here resources reverse course and move from a higher level back to a lower level of productivity.

Somehow we got to the place where those with all the experience are forced to hand over their money to those without any experience. Issues like unemployment, a deteriorating education system, and our loss of competitive advantage will continue to be front page news. However these are all outcomes, not the core problem. As we head into the new year let’s give the real core problem some serious thought. How do we get more input, more decision-making, and more hard earned tax money back into the hands of the experienced wealth creators? To quote Doc’s famous movie line, “Great Scott, we’ve got to go back to the future”.

All financial roads in this country run through Toronto and quite often I find myself there on some kind of exploratory business with wealth management organizations that we are considering. On such an occasion I always try to stop in either unannounced or with very little notice.

These niche companies are chosen based on some very limiting criteria. They must have a relatively small asset base for flexibility. Managers must only have a few funds to manage so that their expertise is focused. Managers must own their own fund company and therefore be free to make their own decisions. They must still love what they do. Most importantly of all I want both managers and employees to have the bulk of their own money in the pool.

And so at four o’clock on a recent spring Friday afternoon I knocked on the door of a small hedge fund company. It was easy to move about the entire operation. Access to the owner-manager was also easy. By this time of day it would have quite acceptable for someone with his success and wealth to be on the golf course, to have headed out a bit early for the weekend, or to be deep into his third martini. But there was my guy amassed in a pile of data looking every bit like a working man, and I left knowing that this portion of my client’s money was indeed going to be in very good hands.

Those who know me and my approach to client care know that I don’t operate solely within the typical “Investment Advisor” box. I have long felt the need to discuss and assist my entrepreneur clients with the larger picture.

I don’t feel the need to isolate financial success. Surely, it must be considered as part of the larger framework… the success of our lives themselves.

I hope you’ll take the time to consider your approach to life with the same discipline a good financial advisor should consider your approach to financial success.

People often tell me they would like to put more money into the stock market, but some newspaper article or economist has presented a very valid reason why right now isn’t a good time. Below you will see a list of some of the major events impacting the USA that would have caused you to question investing any money into companies. However during this 75-year period the DJIA has persistently advanced from a level of only 104 to today’s 12,523, and has produced an average annual return over the last 25 years of close to 11% (taken from the Dow Jones Industrial Average – “DJIA”). Other than operating your own business no other investment (not bonds, not real estate, not gold) has ever beaten equity returns over any 20-year period. What are you waiting for?

This week I would like to once again touch on one of my favourite topics ‘Investor Return Apathy’. Unfortunately most people do not even know what their returns actually are, but when they do get lucky and find out it doesn’t seem to matter to them anyway. Why do we demand such high levels of customer service and product performance in almost every aspect of our lives, but accept mediocre portfolio returns? Why do we shop around to save $50 on a piece of furniture, but turn a blind eye to hundreds of thousands of dollars lost in our accounts?

Most often the time that people view their investments to be ‘at risk’ is when markets have endured a temporary correction. Of course unless you need all or most of your money in the short term it really isn’t risk at all. It is just our latest experience with what is termed volatility. Rising markets can be just as volatile but mysteriously nobody seems to notice.