Words to avoid in finances and business
I’ve been investing toward my retirement for over 20 years, and my Dad’s favorite advice has been to avoid giving in to three emotions: fear, panic and greed. These American Heritage Dictionary definitions, seem to align pretty close to what he’s been saying:
- FEAR: (def.) To be uneasy or apprehensive about. Fear most often perpetuates from the unknown, or the perceived unknown.
- PANIC: (def.) A sudden widespread alarm concerning finances, often resulting in a rush to sell. A sudden, frantic fear, often groundless.
- GREED: (def.) An excessive desire to acquire or possess more than one needs or deserves, especially of material wealth.
Dad loves to tell his story of the ‘dark’ day in October 1987 when the stock market took a serious tumble. In that one day, they lost more money than anyone who knew them at the time thought they would ever have. What did they do? They followed these fundamentals:
- Stay informed. They did their research before making any decision, and read the ‘fine print’ before signing.
- Trust their instincts. Researching ahead of time gave them the cerebral viewpoint, but they also had to feel comfortable with their decisions and their risk level.
- Plan for the unexpected. Maintaining a financial reserve meant they were better prepared to weather an emergency. It also gave them the added bonus of being able to pursue an opportunity or get a better deal, and not just with their investments.
- Take calculated risks. When things were going well, it would have been easy to think it always would, and, perhaps, unwisely extend their risk. But they stayed true to their risk level.
Two years later, in October of 1989, my parents took early retirement (at ages 59 and 57) with their original investment intact and growing.
Since then they divide their time between living in Oregon and Arizona. They have owned their home in Oregon for over 30 years. It sits on a hill with a spectacular view of the lake. They have a small house in Arizona that looks out over the seventh hole of a golf course. They paid cash for it when they bought it four years ago. They left recently for Arizona, driving their motor home (paid for) with their car hooked on the back (which they paid cash for when they bought it new).
Not bad for a retired truck driver and a bank teller.
So another perspective might be that the best-laid plans can only go so far, and the unexpected can be more than you planned for, as well as any number of life experiences. I agree; it’s happened to me.
If you’ve stayed with me this far, you might also be thinking, I still don’t see where one couple’s story has much to do with the financial impacts affecting businesses.
In my opinion, the difference between personal decisions or business decisions is just scale. Having, and following, fundamental financial principles can go a long way toward keeping those three emotions at bay. And we’ve been watching all of them recently at a national and global level, haven’t we?
If you’re in business, what are your financial fundamentals? If you’re not sure what the best fundamentals for your situation should be, one person whom I have admired, and yes, worked for, over the last 12 years is hosting a webinar on business planning as part of the Global Entrepreneurship Week (November 17-21). The webinar, also known as the “Plan-As-You-Go Planning; Going, not gone,” is being hosted by Tim Berry, author of the book The Plan-As-You-Go Business Plan, original creator of Business Plan Pro, and the founder of Palo Alto Software. I think you will find him to be an excellent resource.
Did I mention Tim’s webinar is free? It’s definitely something to consider.
Palo Alto Software