You Can’t Live in the Future
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.
