I’M sure you’ve heard of the sports adage, “the best defence is a good offence”.
Well, in a game like football or rugby, what that might boil down to is the coach’s conviction that keeping the opposing team off balance by having his players launch one offensive wave after another is the best way to NOT lose and thus raise his side’s probability of emerging victorious.
Personally, though, I don’t know if that is always the best strategy for a serious team to go into a championship game. The cause of my uncertainty is simple: I’ve never been much of a team sportsman, preferring, in my secondary years in Malacca High School (MHS) from 1977 to 1981, to focus on individual efforts associated with middle distance running, competitive swimming and high-jumping.
Sadly, even there, my track and field and swimming pool accomplishments were mediocre, which reinforces my recognition that I am no sports pundit! Thirty-five years ago, in 1981, when I was chosen to be the captain of my school sports house Minto, we came in dead last among MHS’s six houses!
What I do know with certainty, and can declare with conviction rooted in hard won personal knowledge, and tested over many years running my small financial planning practice, is that a lack of defence in the construction of a personal financial plan is a recipe for disaster.
A complete financial plan for any responsible breadwinner requires three elements or dimensions to dovetail together in line with his or her life goals. They are: wealth protection, wealth accumulation and wealth distribution.
In George S. Clason’s personal finance classic The Richest Man in Babylon, there is a short chapter titled “The Walls of Babylon”, which gives a riveting account of an Assyrian assault upon ancient Babylon and how its immense walls withstood that attack. Near the end of that chapter Clason wrote:
“Babylon endured century after century because it was fully protected. It could not afford to be otherwise.”
There is a lesson there for us, which is rooted in the wisdom of using sound advisory services and solid financial products to help us reach our goals, whatever those may be.
My favourite definition of financial planning comes from an early version of the Certified Financial Planner Board of Standards’s website: “Financial planning is the process of meetin your life goals through the proper management of your finances.”
Identifying those life goals is the initial step in figuring out what products are best suited to helping you fund your goals, which most commonly encompasses retirement funding (my practice’s primary focus), kids’ tertiary education funding, and general wealth accumulation.
Interestingly, in Thomas C. Corley’s book Rich Habits: The Daily Success Habits Of Wealthy Individuals, there is an illuminating passage on how life’s winners operate: “Successful people are long-term thinkers. They are constantly looking to the future in an effort to determine where they are in terms of accomplishing their goals.”
I know you desire greater success. We all do! As you take time to figure out what you must do to accomplish your key goals, I suggest you tackle life’s endless challenges by beefing up both your offensive and defensive capabilities.
If you don’t know where to begin, talk to your successful friends and relatives. Ask them to recommend professionals they have worked well with to help you fill in any gaps in your skill set.
Clason’s closing words of that portion in his great book convey advice you can implement to help you figure out what to focus on as the year comes to an end.
“The walls of Babylon were an outstanding example of man’s need and desire for protection. This desire is inherent in the human race... In this day, behind the impregnable walls of insurance, savings accounts and dependable investments, we can guard ourselves against the unexpected tragedies that may enter at any door and seat themselves before any fireside.”
Twitter@RajenDevadason
The writer is a Securities Commission-
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