business

GAINS & LOSSES: ROSS LEVIN

Ernest Hemingway once was asked to write a book in six words. To some, it may be his best work. "For sale: baby shoes, never worn."

I have imagined many stories about these six words. Is this about a failed pregnancy? Is it about people who wanted to conceive yet were unable to do so? Is it about a grandparent being kept away from their grandchild?

This got me thinking. People are always asking me what financial planning books I would recommend. Now, since times are a little tight, rather than have you go out and buy a book, I have written a few six-word soliloquies based on lessons learned from clients.

Owned a ton. Crushed by it. Of course, the central tenet of financial planning is to pay yourself first by spending less than you make and saving a portion of all that you earn. While this is sound advice, it really is not complete.

We have had clients come into our offices who have saved over their lives, built up nice nest eggs, and also have spent money on many things that they thought mattered. Over time, those things mattered less, yet they were reluctant to give up something that they already had.

How many possessions do you have because you think that you will use them someday? Little things like the never-used cross-country skis or big things like the cabin for which you no longer make time may be better used by someone else and relieve you of the guilt that can come from overabundance.

A friend of mine sold her car several years ago and now walks or takes public transportation almost everywhere she goes. Once or twice a month she rents a car for the weekend to do some chores for which she would rather drive herself. Not only does this strategy save her money on buying a car, gas, insurance and upkeep, but I guarantee that she gets more exercise than I do.

Write down your expenses. Include items bought but that you are not using and what this ownership costs you. If you sell these, you may be shocked at how little the sacrifice is for the gains ahead of you.

Risked much. Lost much. Gained more. Whether it is the stock market, choosing a spouse, moving to a new home -- or almost any major decision we make -- we must accept the risk of things not going exactly as we had planned in order to reap the rewards of a richer existence.

I know a developer who recently filed personal bankruptcy on a business that had been tremendously successful. He said that there are people he runs into who still thank him for the homes he built them. While he certainly did not want things to end this way, he loves the positive impact that he had on his customers.

Don't try to avoid risk, manage it. Niebuhr's Serenity Prayer encourages us to "accept the things [we] cannot change and the courage to change the things [we] can." The things that go wrong help us appreciate those that are going right.

Kept looking back. Couldn't move forward. While Santayana taught us that "Those who cannot remember the past are condemned to repeat it," he should have created the corollary: "Those who live in the past have no future."

It is important to distinguish how the past can guide you from how it can control you. If you lost money in the stock market and vow to never invest in stocks again, you are being controlled. If you decide that you want to better understand your risk tolerance or your asset allocation, you are being guided. Our most successful clients are those who have learned from their mistakes, not those who wallow in them.

She had little; more than imaginable. If you do nothing else before the start of this year, I suggest you sit down for at least 15 minutes (yes, set a timer), and write down those things for which you are grateful. We get so caught up in life's volatility that we don't focus on those little things that have an impact on us. As you do this, think about what you can do for others.

I get so moved by handwritten notes that I receive, that I try to write them myself. One of my clients drives around town with sandwiches and socks to give to those people at the stoplights who appear homeless. Our family gives 10 percent of our earnings to causes that we care deeply about. Maybe it's unlikely that we can change the world, but we can each certainly improve upon someone's world.

Spend your life wisely. Start now.

Ross Levin is the founding principal and president of Accredited Investors Inc. in Edina. He is a certified financial planner and author of "The Wealth Management Index." His column appears on the fourth and fifth Sundays of the month. His e-mail is ross@accredited.com.