Written By: Candice Stanley
A long, long, time ago in a galaxy far, far away we learned the wise ways of the Jedi. Our culture has been entertained by Star Wars for decades now beginning in 1977 with Episode IV – A New Hope. We will soon see the 11th contribution to the franchise, and I’m more than excited to see it. Star Wars also gave us a treasure trove of one-liners such as, “I have a bad feeling about this,” and “Luke, I am your father,” which is actually a misquote by the way. The actual line from Darth Vader to Luke is, “No, I am your father.” There so many lessons we can take away from Star Wars, but being the financial advisors that we are, we’d like to explore some financial lessons.
1. Always pay your debts – Don’t follow Han Solo’s example of not paying back the debt that he owed Jabba the Hutt.
Debt gets in the way of savings. If you’re spending the time outrunning debt, then you are losing time to save and for your savings to grow. One of the fundamentals of investing is that growth needs time. Therefore, avoid credit card debt and student loan debt if you can. In reality, there is debt that we may not be able to avoid. We need a house to live in and may have to utilize a mortgage. We may have to get a car loan to purchase a reliable vehicle. If possible, however, buy a used vehicle and minimize the amount that you finance. Save for a sizable down payment on your home so that your payment is reasonable enough to provide for savings in your budget also.
2. Do or do not. There is no try.” – Wisdom from Yoda that can speak to consistency.
Another fundamental of investing is that your savings rate ultimately determines your success. You can’t expect to save $100 irregularly and then seek out some “hot” investment that will suddenly set you up for retirement. If you develop consistency in your savings habits, you will eventually see the fruits of your success. Very often the clients we meet with who have been most successful at saving for retirement have done it over a significant period of time. They contributed to their company’s 401(k) or similar retirement plan, or they have persisted in saving regularly in an IRA. As Qui-Gon told Anakin in The Phantom Menace, “Always remember, your focus determines your reality.”
3. Don’t be overconfident, seek out a good mentor – Luke tells the Emperor that his overconfidence is his weakness. Are you overconfident that you don’t need anyone to help you?
Everyone needs help from others at one point or another throughout life. When my car died a few years ago, I did not begin to figure out how to fix it myself. I found an expert mechanic to diagnose and fix it. Are you coachable enough to let an expert help you with your finances and your retirement? The internet offers so much information, but a trusted advisor should know your specific circumstances to help you personally. Luke wouldn’t have become a hero of his story without the guidance of good mentors like Obi-Wan and Yoda. Advisors are not Jedis, and we don’t have the Force to move objects with our minds, but we can offer mentorship on your journey to and through retirement. Vanguard did a study in 2016 about the value that an advisor can possibly add to your retirement accumulation. Their study concluded that through behavioral coaching, portfolio construction, and wealth management an advisor could be worth 3% in your portfolio.
I think I could talk about Star Wars for days, but for all of you non-fans out there, I’ll refrain. I will say however, that I’m just as passionate about helping others with their finances and planning for retirement. With patience and guidance, you can be successful and turn the tide if you start now. You can do this, and may the Force be with you.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Vanguard’s 2016 Study – https://advisors.vanguard.com/iwe/pdf/FASQAAAB.pdf