One of the most common conversations in the investment business is that about performance and how well an investor is going to do if they invest with a particular adviser or firm. Brokers always know the hottest new products and what you should purchase so you will do well. The commissions they earn have nothing to do with their product recommendations of course and as long as the particular product is deemed suitable for you, then all is good.
Leaving aside discussions of things like fiduciary duty and front loads, trails and other forms of fees and commissions, the factor omitted in all these investment discussions and offers is the ultimate goal of the investment itself. One might be forgiven for believing that the goal was performance – beating the market, making more than other investors, piling up the money. But if we step back and take a moment to think about it, that performance cannot be guaranteed and the investor probably has as good a chance of losing money as of beating the market, etc.
The true goal for an investor is to have enough money to live the way the investor wants to live and spend the money on things the investor wants to buy. It might be an expensive lifestyle with its trappings of houses, cars, jewelry and the like. Or it might be to fund education for children and grandchildren, supporting a charity or some good works, helping a special needs child, caring for an aging parent or a combination of such things.
The pile of money – successful investing – is good for many things. It will attract the taxman, scammers and thieves, and those who sell investments, the dream. That money is also good for making your own wishes come true and not necessarily those wishes of other folks who need your money for their own ends. So before you sign on for that product that is going to make you wealthy and beat those other folks, think again about what you really want and need.