Forest Service Campgrounds and Investing | From the desk of Matthew Haertzen

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The new year brings the opportunity to make new choices and commit to new habits. It is also a great time to review the fundamental thinking and good habits that we already have in place. Let's talk about the good habit of keeping a sound investing philosophy as an example. What is an investing philosophy? It is the fundamental principles that guide investing decisions. My investing philosophy informs my investing strategy for you, my other clients, and even for myself. Philosophy is the thing I return to when markets crash and doubt creeps in – it acts as the glue that holds everything together.

Let me share some insight into my philosophy by telling you about one of my favorite vacations. It was one of the first vacations I had taken with my wife - we were newly married, living in Minneapolis, and working full-time. We decided to leave on a Friday after work and drive fourteen hours to Bozeman, Montana. On the way there, we were too tired to keep driving, so we pulled over at a rest stop, took everything out of the back seat so we could recline the front seats of her Honda Accord (the same one mentioned in Don't Let This be a Debt-riment to your Retirement) and sleep for a couple hours before continuing our drive. We eventually arrived at a Forest Service campground near Bozeman and spent the next eight days camping in a tent, hiking, biking, fishing, and whitewater rafting. We had an amazing trip! Somehow, I still remember the grand total of expenses for that trip came to just under $600. It was by far the least we have ever spent on a 10-day vacation, but at the same time one of our best vacation memories. My wife and I still reminisce about that trip to this day.

You may also have a story like the one above. I think these kinds of stories illustrate how we can all put our fundamental principles, or philosophy, into practice. For me, this story reminds me of how important it is to me to live within my means, which is just a piece of my overall philosophy.

For most of us, building a nest egg requires many years of hard work, budgeting, and a laser-focus on spending prudently and maximizing savings. When my wife and I took that vacation we were younger investors, and it was tempting to delay saving and investing, thinking we had plenty of time to get around to it someday. But that $600 vacation gave us our adventure without blowing the budget while allowing us to continue saving toward our future. Some young investors do procrastinate and miss out on the one big advantage they have: time and the power of compounding. I know it may not seem like the small amounts set aside with every paycheck will amount to much, but they do. I also know it may feel like making the sacrifice to save now means missing out on extravagant vacations or purchases. But living on a budget can be just as satisfying.

Here are the key tenets of my investing philosophy. If you have read any of my past articles or already work with me on your investments, these points should each be familiar to you.

Live within your means, keep an emergency fund, and work to eliminate debt.
Consistently save and invest at least 15% of income. If possible, save more.
Use tax-favored retirement accounts as much as possible. Always take advantage of employer-matching contributions to retirement accounts.
Diversify.
Minimize fees.
Keep a long-term focus. Ignore short-term market fluctuations and stay invested.

Admittedly, my investing philosophy is simple – just like a Forest Service campground. There's nothing too exciting about it. In fact, I prefer it that way. You've likely heard me tell you that if I do my job right, our review meetings will be very boring. In that spirit, I am hoping for a happy and humdrum new year.

If you would like to discuss investing philosophy with me, you can email me at:
mhaertzen@wtwealthmanagement.com or call (520) 204-1058.

You can also schedule a meeting directly with me using this link: Schedule with Matt

Sincerely,

Matt Haertzen, CFA, CFP

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