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How Do You Measure Investment Success?

As a small business owner, entrepreneur or an investor, how do you measure success when it comes to your financial investments? Most investors do not have defined measurement criteria to determine whether 1) their investments are building their wealth...and NOT someone else's...and 2) they are successfully tracking toward a defined 'goal' with assurance and peace-of-mind.

One question I always enjoy asking investors is; how do you determine whether your investments are receiving the returns they have rightfully earned and that those earned returns are working to maximize your financial future? Approximately 80% of the time I get a big blank stare. The other 20% try to convince me that their advisor knows how to pick 'winning' stocks or that 'hot' fund manager that can't lose. But, when pressed how they measure success, that big blank stare appears. It is after those blank stares that I get the "I never gave it any thought, I just assume..." 

I too "assumed the same" for many years until I learned the truth and it was then I made a choice to define my investment measurements, leave the financial services industry in my rearview mirror and recapture the earned wealth the industry had been confiscating from me, unknowingly. 


"The beginning of knowledge is the discovery of something we do not understand." - Frank Herbert US science fiction novelist (1920 - 1986)


Before I describe how I now measure investment success, I'd like to share my personal investment experience. I think you'll find it of interest and might even find some similarities with your investment experience(s) or know someone that has.

When I started investing in 1982, I never gave the above questions any thought. I was taught that all I had to do was start young, contribute on a consistent basis, choose 'solid' investments and then...the promise land awaited me at retirement. Something changed however along my investment journey that no one had taught me about or how to deal with it. During the '90's,' there was a fundamental, yet very profound shift that no financial advisor discussed or shared with me. The financial services industry shifted, almost transparently, their #1 priority from serving the best interest of their clients...to serving their own best interests and became undeniably self-serving in nature. The last decade exposed this fact with the huge bonuses paid to those in the industry, the massive fines paid to settle allegations for misleading investors, conflicts of interests and fraud, and in my opinion, two artificially created bubbles. These two bubbles, Technology and Housing, cost investors trillions of dollars in losses both times.


After the first of these bubbles burst and having lost over 50% of the value of my investments, I committed to NEVER experience the pain I felt and the trust I lost for the financial services industry. That was a defining moment in my investment journey. I sought out a solution to bridge-the-gap from being where I was investing with the industry, to "somewhere else." That "somewhere else" was where I would be in complete control of my financial future and with an assurance...guarantee... my money was working to build my wealth...and NOT someone else's. I began to read books from the 'true titans' of the industry like John Bogle, Peter Lynch and Larry Swedroe to name a few, and every article on Do-It-Yourself investing. I started listening to a weekly financial podcast focused on investor education. I watched seminars on DVD and even went so far as to go to work for a large broker/dealer to learn how this industry works from the inside out.


"The goal of education is the advancement of knowledge and the dissemination of truth." - John F. Kennedy


My new found knowledge empowered me to no longer accept what the financial services industry was 'feeding investors' but rather challenge it. I discussed with friends how they measured investment success. Most were accepting of what the industry told them and the results of their financial statements...without question. The 'measuring stick' was the following; if the value of their portfolio was going up, that was good and their advisor was doing a good job. If it was going down, that was not so good but it was ok because their advisor assured them it's just the way markets operate and everyone else is experiencing the same. No one knew why or if the degree their portfolio values were going up or down made any sense.


This was the catalyst that inspired me to begin educating investors, sharing the simple truths I had learned over that five year period of enriching my investment knowledge to play a new game and teaching them how to recapture their earned wealth and put it to work toward their financial futures.


"I was bold in the pursuit of knowledge, never fearing to follow truth and reason to whatever results they led." - Thomas Jefferson


I believe that all skills are learnable and that through education, knowledge is power but only when it's applied and it empowers a person to take action.


I no longer measure investment success solely by numbers alone, but by a few simple principles that I choose to define. Here is how I now measure investment success with assurance and a peace-of-mind that I'm on track to financial success and freedom. I: 

  • Made a commitment to enrich my investment knowledge on a continual basis and at a pace that fits my lifestyle.
  • Keep investments SIMPLE!
  • Know who I'm investing with and whose interests they must LEGALLY serve, first and foremost (This is huge when people understand whose interest the majority of those working in the financial services industry must legally serve).
  • Am in complete control of all my investment strategies, goals, objectives and decisions and am accountable for them.
  • Invest with a long-term perspective.
  • Understand my tolerance for risk of loss and invest accordingly on a consistent basis.
  • Control ALL costs to minimize fees, taxes and turnover in order to maximize MY investment returns, within my tolerance for risk, and ensure those returns are building MY wealth.
  • Own the world through massive global diversification.
  • Leverage the power of compounding in MY favor.
  • Invest only in strategies that are academic-based, time tested and structured on mechanical logic.


Investors today have two choices when it comes to investing. They can either invest with a financial advisor playing within the financial services industry or as a Do-It-Yourself investor. Below, I define what differentiates these two choices all investors face. 

The first choice is what most people choose today. They invest with an advisor within the financial services industry and relinquish all control to them thinking they are dealing with 'financial professionals.' I like to refer to this as investing in 'Their Game'. Anyone playing 'Their Game' is completely at the mercy of these 'sales professionals' (Notice: I did not call them 'financial professionals' because they are not) whose focus is totally self serving. These 'sales reps' legal fiduciary responsibility is to their company and its shareholders, first and foremost, by generating revenue and profits...all at the expense of their investors. 

Here are a few key characteristics of the game they have investors playing: 

  • Complexity
  • Excessively high fees, taxes and turnover
  • Continual conflicts-of-interests
  • Actively managed short-term strategies to keep money in perpetual motion
  • They're in complete control of your investments
  • Invest in complex speculative and high risk products always chasing past returns and what's 'hot'
  • Investors are uninformed with little power...and the industry's preference is to keep them that way
  • Investor's money is building wealth for the industry and all those that work in it...period!


The second choice is that of a new breed of DIY investor, better known as an informed Self Empowered Investor, and what I refer to as 'Your Game'.  'Your Game' is played with a distinct home field advantage and where the investment strategies are characterized as follows:

  • Simplicity
  • Minimized fees, taxes and turnover
  • Elimination of ALL conflicts-of-interest
  • Strategies are all academic based and leverage mechanical logic so there is no guessing when to get in or out 
  • You're in complete control
  • Invest only in products you can understand and YOU capture the earned returns
  • You're an informed and empowered investor, and the kind of investor the industry despises. 
  • Your investments build wealth for YOU...NOT an advisor and the industry!


If you take nothing else from this article, consider the following regarding the two different games. First, the two are diametrically opposed and second, it is the investor who puts up 100% of the money, assumes 100% of the risk and has to pay-to-play 'Their Game', and here's the most important point; those same investment dollars, serve two totally different masters in each game, them or you.


If you want to see the difference recapturing the earned wealth can make toward your financial future, then check out the following video titled The SEI Difference; http://theselfempoweredinvestor.com/?page_id=1683. I guarantee this will get your attention.


The choice is simple for investors. They can continue to play 'Their Game' or commit a small amount of time to become an informed self empowered investor and play a new game, a winner's game, 'Your Game.'  Maybe it's time you define or redefine how you measure investment success and put your investment dollars and earned returns to work building YOUR wealth...NOT that of an advisor and the industry.


What is the value of your future wealth potential? Are you willing to commit to enrich your knowledge, learn the basic investment principles, dedicate a small amount of time and initiate simple actions steps to take control of your financial future and escape the tyranny of Wall Street and the financial services industry?


I would appreciate you sharing how you measure investment success and your experiences. Did you know the financial services industry confiscates the majority of an investor's lifetime wealth potential, unknowingly, and that it is all controllable? 

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