facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog external search brokercheck brokercheck Play Pause
3 Key Traits Leading to Financial Success Thumbnail

3 Key Traits Leading to Financial Success

Retirement Planning Investing Financial Planning

As much as financial planners, like us, want to think that number crunching is the key to creating a successful retirement, it likely has more to do with your mindset than anything else.  Today we share three key traits that can lead to better outcomes.

Watch Now: The Right Mindset:  3 Key Traits Leading to Financial Success


0:00 - Intro
 0:29 - Key statistics
 1:16 - The first mindset: Future focused
 4:55 - The second mindset: Be an optimist
 6:43 - The third mindset: Reward focused.
 10:11 - Behavior matters more than math.
 12:05 - Outro

Your Mindset Is Important

Goldman Sachs recently compiled a study of over 5,000 workers and retirees and what they found was very interesting.  Mindset goes a long way to helping you succeed as you work towards retirement.   It matters more than whether you use a Roth vs a traditional IRA.   Consider this…

  • 67% of the people with optimal behavior have high retirement savings vs just 24% of those who have suboptimal behaviors.
  • 78% of the people with the right mindset are ‘on track’ compared to 42% of those without the right mindset.  
  • 70% of people with optimal behaviors have a personalized retirement plan vs. 48% of those with suboptimal behaviors.

1.  Focused on the Future

We live in a world where there is a strong emphasis on glitz and glamour.   Television and social media are full of examples of fancy clothing, elaborate homes, and flashy cars.  The focus on consumerism can create bad habits and unrealistic expectations.

The first important trait leading to success is being focused on the future.  We all have expenses and things we want or need to do today. But focusing too much on today means that we sacrifice our future.  Balancing today's needs with tomorrow's helps you start to accumulate assets for later in life. 

Saving is the most important factor when it comes to building a nest egg.  How you save, what investments you use, and all of those other details are what you worry about after you determine HOW MUCH you are going to set aside for future needs.  

2.  Be Optimistic

Pessimism dominates the headlines.  "If it bleeds, it leads" is a common way to describe the news media.  We all hear about the next market crash and the next catastrophe that will impact our lives.  The continuous parade of doom and gloom makes it very difficult to see what is really there. 

The historical records show a pattern of continuous improvement. 

  • When Social Security was created in 1935, the average life expectancy was roughly 65 years old.  Today, average life expectancy is more than 80 years old.  
  • We have eradicated diseases like smallpox, polio, and measles.  
  • You have more technology in your pocket with your smartphone than NASA had when they sent people to the moon.

From an investor's perspective, this has created amazing opportunities.  Businesses of all sizes drive that continuous improvement.  As owners of those companies, we can benefit from the wealth they can create.

3.  Focus on Reward, not Risk.

Investing is a tradeoff between the near-term risk of price decreases and the potential for long-term growth.  Too often, people get caught up in the possibility of 'losing money' during a short-term event.  This leads them to focus on preserving capital instead of pursuing growth.  At some point in our lives, it makes sense to shift our focus on some of those short-term risks, but if you are saving for retirement, you need to be focused on the rewards.  

Keep in mind this is just a mathematical example for illustrative purposes, real-life results will differ.

The reward-focused investor uses stocks, and over 40 years earns 10% per year.  She saves $2,000 per year and accumulates nearly 1 million dollars.

The risk-focused investor uses bonds, and over 40 years earns 5% per year.  He saves $2,000 per year and accumulates roughly $250,000.

The reward-focused investor experiences more volatility along the way but earns nearly 4 times more over time.

Behavior Matters More than Math...

Over time, we have seen the differences in outcomes between the people who exhibit these traits vs those who don't.  It doesn't mean the pessimistic, risk-focused person runs out of money.   But the results between the optimistic, reward-focused investor and the risk-minded client are significant.  

At some point, the details and the math matters.  But your mindset is the first step to planning for your future.  When you're ready, we are too.  Simply fill out the form below to get started.

Appearing in this video:

Todd Kimpel, CLU®, ChFC®

Todd is a financial advisor in Wheeling, West Virginia and one of our founding partners.  He has helped hundreds of families plan for retirement and build wealth for over 40 years.

Neal Watson, CFP®

Neal Watson is a financial advisor in Marietta, Ohio.  He earned his Certified Financial Planner­™ designation in 1999.