Needs vs. Wants – Are we much different from our children?

12 Feb 2014

Image“I want, I want, I want” – How often do we hear this from our children? As parents, we normally say, “Oh, you don’t need that….” If only we could practice what we preach.

When it comes to investing many people sound like their children: “I want to beat the market, I want to get my advice for free, I want to time the market, I want gold, I want, I want, I want…”

It all goes back to basic needs vs. wants. Everyone “wants” to beat the market or an index; everyone wants free advice, and everyone wants to time the market. The reality is, what do you really need? We believe it all starts with having a financial plan – a plan in place that establishes your unique goals and a way to accomplish them. Without a plan in place, wants will trump needs, everytime.

Having a plan in place helps you determine your specific “fair rate” of return. Do you need 5% per year, 6.5%, or even 8% per year? Again, until you have a specific investment goal to achieve each year, your default option becomes whatever everyone else is doing. Distractions will present themselves daily: whether it be the real estate bubble, subprime crisis, Eurozone crisis, or as we call it in the office “Apocalypse De Jour”.

It’s a very dangerous proposition to try to do what everyone else is doing. In addition, if you think you can beat the market every year, well than you probably need a therapist not a financial planner. It all comes down to have very specific, fair, and realistic goals in regards to your unique situation. What “cousin Eddy” did in his 401(k) last year or what your neighbor made in gold should have absolutely no bearing or influence on your ability to achieve your “true wealth”.

Remember what you need to earn each year vs. what you want are two very different desires. At the end of the day, are we really much different than our children? I hope so, but in my line of work I often wonder.

Jeffrey A. Johnston, ChFC
President of Premier Investments of Iowa, Inc.
3600 1st Ave NE, Suite 100
Cedar Rapids, IA 52402

(319) 363-3811 or (800) 383-6590

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Premier Investments of Iowa, Inc. are not affiliated.


Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.