By: Joey Casolaro, CFP®
If you’ve ever tried to figure out the “best” way to get healthy, you know how overwhelming it can become.
Should you eat keto, carnivore, vegan, or Mediterranean? Lift heavy weights for fewer reps or lighter weights for more? Run, walk, do HIIT, or focus on Zone 2 cardio?
We have access to more information than ever, but that doesn’t always make decision-making easier; I would argue it often makes it harder. The search for the “perfect” approach can lead us to constantly change what we’re doing or never get started at all.
Financial planning can create the same problem. Should you own individual stocks, mutual funds, or ETFs? What insurance do you need, and should it also be used as an investment vehicle? Should you create Revocable or Irrevocable Trusts in your estate plan?
In both fitness and finances, I’ve come to appreciate one principle:
Simple doesn’t mean unsophisticated. Simplicity is often what makes a good plan work.
Start With the Purpose
One of the biggest changes in how I think about fitness was realizing that different things have different jobs.
I don’t lift weights to lose weight. I lift to get stronger and maintain muscle as I age, so I can continue doing the things I love.
I don’t do cardio to lose weight. I do cardio to maintain a healthy heart and improve cardiovascular fitness.
And when it comes to managing my weight, I focus primarily on what and how much I eat, emphasizing nutritious, minimally processed foods.
Financial planning becomes clearer when we give each decision a purpose, too:
Spend less than you make so you can save.
Invest in diversified, low-cost funds to build long-term wealth.
Choose which accounts to contribute to or withdraw from based on your goals and tax situation.
Carry appropriate insurance to protect against risks that could materially disrupt your financial life.
The goal isn’t to collect as many strategies as possible. It’s about understanding the problem you’re trying to solve and using the right tool.
Less Can Be More
Walk into a gym, and you’ll find hundreds of exercises you could do. But you don’t need to do all of them.
A handful of effective movements performed consistently can accomplish a lot. Adding ten more exercises doesn’t automatically make your workout better.
Investing is similar.
Owning more funds doesn’t necessarily make you more diversified. Several funds may own many of the same underlying investments. A relatively small number of broad, diversified funds may be all you need.
Instead of asking, “How many investments do I own?” ask, “Does each investment have a purpose?”
Complexity can make us feel like we’re doing more without necessarily getting us closer to our goals.
The Best Plan Is One You Can Stick With
You can design the perfect workout, but it won’t help if you hate it and quit after three weeks. The perfect diet on paper isn’t useful if you can’t maintain it.
Your financial plan should pass the same test.
Do you understand why you own your investments? Do you know where your next dollar of savings should go? Can you stick with the strategy when markets become uncomfortable?
Simple doesn’t mean easy.
Eating well, exercising consistently, spending less than you make, and staying invested during difficult markets all require discipline.
There will always be ways to optimize around the edges. But most progress comes from consistently doing the fundamentals.
For your health: eat well, get strong, take care of your heart, and repeat.
For your finances: spend less than you make, save consistently, diversify, manage taxes and risk, and stay invested.
Whether we’re talking about your health or your wealth, the best plan isn’t necessarily the most complicated one.
It’s the one that makes sense, has a purpose, and you can actually stick with.
Joey Casolaro is a CERTIFIED FINANCIAL PLANNER™ at HIGHLAND Financial Advisors, a Fee-Only fiduciary wealth advisory firm that offers comprehensive financial planning, retirement planning, and investment management. Joey graduated from the University of South Florida with a bachelor’s degree in personal finance and successfully passed the CFP national exam in 2021. Joey enjoys working out, spending time outdoors, and hanging out with family and friends in his free time.
The foregoing content reflects the opinions of Highland Financial Advisors, LLC, and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct.
Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns.
Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful or that markets will act as they have in the past.
The above article was written with the assistance of artificial intelligence (AI).