Click below to listen to Episode 102 – High Investment Returns And Wealth

High Investment Returns And Wealth

Comal County Habitat for Humanity Work

Do you have the following traits that may help with long term wealth?

When it comes to high investment returns and wealth, there are common traits, attributes, and characteristics that we see in those with millions in their investment accounts. Many people believe high investment returns are the only way to wealth, but that usually is not the case. For the majority of us, most of our wealth growth has to deal with circumstances outside of returns.

Therefore, Shawn and Bob present 15 commonly seen traits in millionaires that Bob has personally seen in his own clients over the past 37 years, as well as covering some myths on chasing investment returns. Not all millionaires have these traits, but a majority of them do! This includes being hard workers/not lazy; frugal with their money; and strong roots and connections within their communities, to name just a few. So tune in to find out all 15 traits and if you are already on the right track.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters

Mentioned In This Episode

Christian Financial Advisors
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Bob Barber, CWS®, CKA®
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Shawn Peters
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EPISODE TRANSCRIPT

[INTRODUCTION]

Welcome to “Christian Financial Perspectives”, where you’re invited to gain insight, wisdom and knowledge about how Christians integrate their faith, life and finances with a Biblical Worldview. Here’s your host Christian Investment Advisor, Financial Planner, and Coach, Bob Barber.

[EPISODE]

Bob:
Welcome to our 102nd podcast for Christian Financial Perspectives. Today, we’re going to be talking about high investment returns and wealth. I picked this subject because we are finding many people call us and they actually believe that high investment returns are one of the only ways to wealth. And it is for a small minority, but not for the majority of us. For 99% of us, high investment returns have little to do with obtaining wealth. And that’s just something we’re really going to get deep into today. What are the traits of wealthy people? From my 37 years in business, when I started thinking about this, I just started thinking about the traits of people that I know that are millionaires, either one, two, or even three or even $5 million. And what are these traits that I’ve seen over 37 years? I came up with 15 traits that we’re going to go through of millionaires. Now, there are a few million millionaires that don’t have all these traits. There are a few out there, but do you know, they’re in the minority. The majority do have these traits.

Shawn:
There’s always exceptions to the rule. So we’ve got that disclosure out of the way, but wow, 37 years. So you’ve seen a few millionaires over that time.

Bob:
Just quite a few as a matter of fact, but you know what, they’re not like you think. They drive up in this parking lot out here. And some of them are just old ranchers and driving seven and eight year old trucks. And they’re just what I call good old boys. I’m pretty country, and their wives are just wonderful women in the Lord and love the Lord. And I tell you that’s trait number one, the first trait of these 15 traits is they have a strong foundation in God. They have a strong foundation in their families, and they really believe in long-term relationships. I believe these strong foundations is what keeps them from swaying with which way the wind happens to be blowing at the time. When I think about those strong foundations, I think of Matthew 7:24-25. And by the way, on all of these traits, God’s word just came to me about there’s a scriptural passage for every one of these traits. And in this first trait of building that strong foundation in God is from Matthew 7:24-25. “Therefore, everyone who hears these words of mine and puts them into practice is like a wise man who built his house on the rock. The rain came down, the streams rose, and the winds blew and beat against that house, yet it did not fall because it had its foundation on the rock.” So trait number one is having a strong foundation.

Shawn:
That’s a great scripture to go along with that first trait. Everything we do, not just in this podcast, but really everything we do in life, we should always look to scripture to find some sort of basis for that. Now you’re not going to see things about what you should or shouldn’t do on Facebook in the Bible, but more of the principles that may apply to how you conduct yourself online.

Bob:
I want to correct you a little bit there because you think about it, it may say something about Facebook. We’re not to gossip about others, right?

Shawn:
So the principle is there, although of course the technology may or may not have existed at that time. So that’s going to trait number two. They live a self disciplined lifestyle. So to me, this comes out as kind of an obvious one. They aren’t going all over the place. They aren’t changing their mind. They’re very consistent, kind of goes right with the strong foundation like you said in trait number one. It’s that they’re disciplined in whatever it is that they’re doing, whether it’s their walk with the Lord, whether it’s their relationships that they have within their company or the company they work with and they don’t treat it as, oh, we’ll figure it out. They work hard.

Bob:
They have a disciplined approach.

Shawn:
Exactly. So there’s actually two scriptures that we have for this one. The first one is 2 Timothy 1:7, “For the spirit God gave us does not make us timid, but gives us power, love, and self-discipline.”

Bob:
Put that discipline in there, doesn’t it?

Shawn:
Yeah. And then Proverbs 12:1, “Whoever loves discipline loves knowledge, but whoever hates correction is stupid.”

Bob:
That’s pretty clear. Yeah. I mean, you’ve got the word stupid and that’s not a very nice thing to say, but I mean, it’s like when it says it, whoever loves discipline loves knowledge, whoever hates correction is stupid. That’s saying that correcting somebody, don’t always take that wrong. They care about you. They’re trying to help you.

Shawn:
Exactly. And I think we’ve said this before on one of our other episodes, but Proverbs doesn’t tend to hold back. And if anything, I found like if you pull up The Message or one of the other translations where it’s a little more literal, maybe not necessarily the exact word for word translation, it gets more just kind of in your face, to where maybe it says is a moron.

Bob:
Yeah. It just lays it out. That’s what I like about scripture. It’s clear. Trait number three, this is interesting. isn’t it? They’re hard workers.

Shawn:
So surprising.

Bob:
Those that are wealthy are hard workers, and they’re not lazy. The scripture I thought of this came right to me. By the way, work appears in the Bible over 400, I think it’s 450 times or more. I think it was 455, maybe, to be exact. You pull it up. I mean, you pull up your Bible app and put in work and see how many times it appears. But it’s in there a lot, where retire is in there one time. So it’s there, and Genesis 2:15, “The Lord God took the man, put them in the garden of Eden.” And what does it say, “to work it and take care of it.” So, they’re hard workers and there’s a scriptural basis behind that because work as if you’re working for the Lord, because it is God ordained.

Shawn:
No matter what you’re doing, no matter what your position, no matter whether you’re wealthy or not, your work is really part of your worship. It’s honoring the Lord. I know at our church, we always talk about how we turn an everyday space into a sacred place. And Brent, I’m sorry. I may have gotten place and space mixed up, but you get the point.

Bob:
And your church is doing so well. It’s batting cages the rest of the week, right?

Shawn:
Yeah. But no matter where you are, no matter what you’re doing. And when it comes to work, that is a way for you to actually worship and show honor to God. Because whether someone sees you or not in your discipline and in your character, your honesty, that work is a way to praise God.

Bob:
We’re just at trait number four and so far, we haven’t even mentioned higher returns in wealth yet, have we? But we will eventually. We will.

Shawn:
Yeah. So trait number four, they’re consistent savers and grow their wealth over time by investing wisely. I actually like this one because this kind of reminds me, I think it was our last episode, we talked about how investing won’t save you from saving. And so in this one right here, they’re consistently saving and investing, not just one. So, the verse for this one is Ecclesiastes 11:2, “Invest in seven ventures. Yes. In eight. You do not know what disaster may come upon the land.”

Bob:
And it’s interesting in all the years that I’ve been managing and helping wealthy people manage their wealth. This is so true. Very few, and I know that real estate is really big, and you and I know that, but out of the 370 households that we serve here, there’s only like two that have made the wealth in real estate. Only two. The majority make it by investing across many different sectors in a diversified portfolio, which actually it goes so well with this scripture from Ecclesiastes 11:2.

Shawn:
And in addition, those same households also have something in common, which is some of the other we’ve already covered, where it’s from working hard, it’s from saving diligently. So yes, they are investing and they’re dividing it through diversification. But it’s not just here’s this money one time, and it’s magically going to be enough for retirement 30, 40 years from now. No, it was little by little over time.

Bob:
And in a lot of different areas, not just one stock, right? I mean, we have a few, but it’s not the majority, because there’s always an exception. There’s always an exception to the rule. So trait number five. I didn’t think we would ever be saying this one. They’re frugal. They’re very frugal with how they spend money. And they look at everything, and I think they look at it through the eyes of this particular scriptural verse that I’m going to give Luke 14:28-29, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost?” That’s right. That’s the main part. Estimate the cost to see if you have enough money to complete it, “For if you lay the foundation and you’re not able to finish it, every one who sees it will ridicule you.”

Shawn:
Wow. That is a great one. If you ever wondered if budgets are only for poor people, the answer is no, it doesn’t matter what your income is. It doesn’t matter how much wealth you have. Those who are wealthy tend to stay wealthy because of following this principle.

Bob:
They’re frugal. Yeah.

Shawn:
It doesn’t mean they don’t spend money. Maybe they do buy a nice car. Maybe they do buy a vacation home, but they don’t just make these quick decisions, and just say, oh, well in my portfolio, I have $2.5 million. I’ve got enough to buy this million dollar house. No, no. They look at what is the actual cost going to be, because now they may have gone from retiring on a certain income that they were expecting per year to retiring on maybe half that.

Bob:
Yeah. They gotta learn. They gotta learn to live on it. I’m always looking at financial stuff on the internet. I probably send you and Theresa at least two or three articles a day of stuff I find.

Shawn:
And I try to read on, especially like CNBC and other stuff, I try to read as much as I can in the morning so I can at least say yes, Bob. I looked at it.

Bob:
Well, I was just noticing one the other day and it was talking about athletes and how athletes make all this money. Yet, the average athlete, just 5 to 10 years later, doesn’t have anything. And they had the chance to be millionaires the rest of their lives. But they weren’t frugal with them.

Shawn:
They are a classic example of sudden wealth syndrome, just like lottery winners and people striking gold. And it’s really sad because these athletes, a lot of times, I mean they’re kids, even if they were considered middle-class. I mean, the types of salaries that professional athletes pull in to all of a sudden go from, I don’t know, maybe your household made $50,000 or $60,000 a year, and now you’re effectively making $50-60,000 a month. They just don’t know how to handle it and they don’t realize that all of these cars and houses and boats and trips they’re going on, that if they get injured or whenever they do finally retire, if they haven’t planned accordingly, it’s going to either be already gone or they’re going to run out really quick. But this actually goes into trait number…

Bob:
Number six.

Shawn:
Yeah. So trait number six, they believe in giving back a portion of their income to charities and helping others, which reminds me of the fact that no matter what you have, whether it’s a little or a lot, it belongs to God in the first place. So this trade of giving back, to helping others, to charities, to church, it makes sense. Like, God asks us to do that. We need to support those who need it. So giving back, it’s a very Christian thing to do

Bob:
Well. And also, it released selfishness. Yeah. When you’re not giving, it’s all about me and that selfishness takes place. And when you become selfish, then that can create financial disaster. Yeah.

Shawn:
In my opinion, there’s a big difference between being frugal and being selfish. Frugal is you’re careful with what you spend, not that you are hoarding it for yourself.

Bob:
So I think it’s interesting. We talk about being frugal and then the very next thing is giving.

Shawn:
So 2 Corinthians 9:6-7 is our trait number six verse, “Remember this, whoever sows sparingly will also reap sparingly and whoever sows generously will also reap generously. Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver.”

Bob:
I always use this scripture, by the way, when I was in a smaller church and I was always the one that got to, when it came time for the offering, they’d asked me to pray and I’d always say, I want to see y’all smiling when the plate comes by.

Shawn:
All right, you want to take number seven, Bob?

Bob:
Trait number seven of the wealthy is they have a good reputation in their communities. And the scripture that goes with this is from Proverbs 22:1, “A good name is more desirable than great riches, to be esteemed is better than silver or gold.” So that reputation, how do you get a good reputation? You get a good reputation by treating people fairly. Yeah.

Shawn:
Whether that’s your employees, your vendors, your customers you work with, getting back to the previous trait, giving back to the community, giving to others. That’s part of it. Not that you give just to get credit or to get recognition, but you should do it.

Bob:
Right. It’s helping your community. They’re forthright. They’re honest. They that’s how you get a good reputation, from doing things that give you a good reputation. That’s pretty simple. Yeah.

Shawn:
Yeah. I don’t know how else to explain that one. Yeah. So trait number eight, they’ve been married to the same spouse for many years and very few have ever been divorced.

Bob:
Yeah. And this was a hard one for me to actually put in here. I am not going to pass judgment.

Shawn:
Right, right. That’s not what we mean here.

Bob:
Not at all, not at all. I’m just saying that divorce fragments wealth, and not only that, but it gets into all the other areas too, with your children and your reputation in the community.

Shawn:
And it’s hard.

Bob:
It is. It’s very hard, and my heart goes out to anyone that’s had to go through that. It’s not a good thing.

Shawn:
And keep in mind, too, because again these traits that we’re covering, it’s the commonality that Bob is seeing. You’ve seen Bob over the last 37 years. Again, there are exceptions. It does not mean that if you’ve, unfortunately, you’ve gone through a divorce. It does not mean that you can’t be wealthy, that you can’t do things in a way that glorifies God to build wealth. It’s just, it’s a lot less likely that someone would be wealthy who has gone through a divorce.

Bob:
Right. And we do, we have several clients that have been through a divorce, and they’ve picked it up. And they’re doing well because they followed all these and this was no fault of their own.

Shawn:
Well, I would say it is kind of like, just think of it as a simple math problem. If you’ve been married even a shorter period of time, like 5, 10 years, and it was during a really hardworking part of your career and you and your spouse, you’ve been building your assets. And then I would say, it’s pretty typical that stuff gets split 50/50, right? Well, all of a sudden you’ve had, say, 10 years of your life got cut in half. And when you look at investment returns with saving like, well, time is a fantastic tool as far as building for retirement and building wealth. And if you lose half of what you gained during that time, that’s hard to overcome.

Bob:
It very much is. And I would say this is a trait because I can nearly guarantee you that of all those that we serve, the divorce rate is less than 2%, 2-3%. I know those that have been through it. And my heart goes out to them. And here at Christian Financial Advisors, we are going to be compassionate. We are not going to pass judgment. We’re going to help you pick up the pieces and go forward.

Shawn:
Well, I almost forgot the verse, Ephesians 5:31, “For this reason, a man will leave his father and mother and be united to his wife, and the two will become one flesh.”

Bob:
I heard a pastor say one time. She said, remember the old thick construction paper we used to work with when we were kids. And I remember they used to give us Elmer’s glue. Maybe that dates me.

Shawn:
We still use it.

Bob:
We would put that paper together. And once that paper has come together, you have a red piece and a blue piece, as an example. Once that paper comes together, if you try to rip that paper apart, there’s pieces of it on each part. You can’t pull it apart after it’s had some time together. Yeah. Okay. So trait number nine, they have strong roots in their communities and local churches, kind of like some of those at the beginning. Hebrews 10:24-25 says, “And let us consider how we may spur one another on toward love and good deeds, not giving up meeting together as some are in the habit of doing, but encouraging one another, and all the more as you see the day approaching.” They have that support group that the church gives you.

Shawn:
Well trait number 10, they do not chase foolish fantasies, trying to find perfection and utopia.

Bob:
I see a lot of that today.

Shawn:
You want to give an example of that one?

Bob:
Well, no, I don’t. I just see more and more of it, unfortunately, in younger generations. Finally, they find out by the time they hit about 30 or 35, I’m not going to find utopia. I’m not going to find perfection. Life is not that way.

Shawn:
And so is that more of the the idea that you’re looking for, Oh there’s like the perfect place to live or there’s the perfect job that’ll somehow be everything that I’m looking for. And the reality is you can make it, you can make a life and you can have joy almost anywhere. But the thing is, is if you’re constantly chasing this perfect place to live, this perfect job, this perfect group of friends, or whatever it is you’re looking for, you’re going to spend all of your life looking. You’re never going to find it.

Bob:
Yeah, that’s true. That’s exactly right. And we got the scripture goes with that, go for it.

Shawn:
All right. Ecclesiastes 4:4-6, “And I saw that all toil and all achievement spring from one person’s envy of another, this too is meaningless, a chasing after the wind. Fools fold their hands and ruin themselves. Better one handful with tranquility than two handfuls with toil and chasing after the wind.”

Bob:
It reminds me what Paul was saying, and I’ve learned to be content in all things. Yeah. Whether I’m wealthy or whether I’m poor, whether I’m well fed or whether I’m hungry, I’ve learned to find contentment. And that contentment is Christ and trying to find perfection and utopia here on earth. I’m sorry. It’s just never going to happen. Trait number 11. They’re very honest and forthright in their dealings with others. This is one of them. The scripture I’ve used many times in Christian Financial Perspectives, Luke 16:10, “Whoever can be trusted with very little can also be trusted with much. And whoever is dishonest with very little will also be dishonest with much. There’s a real scriptural principle in here, isn’t there. It’s kind of comes back to the parable of the talents, too.

Shawn:
It does. That’s what I was thinking.

Bob:
Because if you’ve been trustworthy in handling those little things, then maybe I can give you a little bit more to handle and then a little bit more.

Shawn:
Kind of like the idea of if you have a career path and you show yourself to be someone who was honest, no matter who they’re dealing with, that you’re honest and you have integrity and you can be trusted with projects you’re given or tasks that your supervisor gives you. Well, those people are far more likely to be promoted and to be given more responsibility because those that they’re working with and those are working for, they know they can trust them. And if you sit on your hands or, fold your hands, as we talked about in that previous verse, you’re not going to go much further.

Bob:
Trait number 12.

Shawn:
Trait number 12, they are careful about getting into too much debt and many are completely debt-free and have been for years.

Bob:
Yeah. I just notice this with those that are wealthy and have the million or multi-millions, they are really careful about debt. Yeah. The majority of them are actually debt free. I mean, zero debt at all, and I’m not going to go down that path of saying you can’t go buy a home. I mean, because my dad used to say whether you rent or whether you buy, you pay for the place you occupy. So I can see that, but it’s about being wise with debt.

Shawn:
Yeah. Well, I think maybe the better example for people listening is it’s not about whether or not you have a mortgage on a home. It’s going to be very rare if someone, especially earlier in their career and in their life to be debt free on their home, but a good example would be, do you have debt beyond say a mortgage or maybe even at most two car loans, because if you’ve got a credit card that you have a running balance on, if you have multiple credit cards or you have other, short term vacation loans or whatever that list is, that’s not going to help you in the long run.

Bob:
And that right there is Proverbs 22:7 which says, “The rich will rule over the poor,” right?

Shawn:
Yeah. The rich will rule over the poor and the borrower is a slave to the lender.

Bob:
That’s why the rich are the banks. I guess they’re the ones who ruling over the poor, and the borrower is slave to the banks. Okay. Trait number 13, their identity and self-worth is not based on things. Okay. Hear me out on this. Whereas like the ole millionaire coming up and he’s driving a six-year old truck. It’s not based on things like what kind of car or big truck you drive. Now here in Texas, everybody’s got to have the King Ranch Edition. Have you seen what those things cost?

Shawn:
Even aftermarket, they’re a little pricey. It’s crazy.

Bob:
And how large their home is. It’s not based on that and millionaires, that’s not where their identity’s based. Now, I will say this. Many do drive nice vehicles and they do live in nice homes, but it’s not what they emphasize in life. Many millionaires I know drive 6 to 10 year old cars that they take very good care of. They live in your every day, average type neighborhood, like right here behind the office that we have. This is where they live. The neighborhoods, many times, with the million dollar plus homes have the million dollar plus loans, too.

Shawn:
Okay. It makes me think of the point is not whether or not it’s a new car. I think the more important thing is that people who are wealthy, they typically don’t have their identity tied up in the car. One person I think of is my own dad. And he definitely could buy a really nice car for himself. He’s always wanted, I think, it’s a BMW X6 or something. It’s just like SUV that he likes, but he’s usually going down to the farm or going to the mine. And if you drove up in one of those things. Yeah. Probably could drive through, but he’d ruin the car and everybody would kind of laugh at him like, Steve, what are you doing driving that? He almost always has a more simple, basic F150. He’s got a truck bed, it’s got 4×4 so we can get through stuff, and that’s it. And he just trades it out a little more frequently, but he doesn’t spend a lot of money on it.

Bob:
I was thinking about this while you were saying that. I kind of brag about myself now cause I’m driving an old car. Isn’t that weird? I mean, I’ve gotten to this point that we’re talking about, and now when I could go buy any kind of car I wanted, I mean, if I wanted to go buy $200,000 Mercedes, whatever, I could go buy it.

Shawn:
I remember you said something to me recently, you were talking about looking at some other SUV’s or even just getting a new Ford Explorer, and you did what most people should do, especially if you’re following these traits, you’ve looked at the cost. You looked at how is this going to affect things? And you realized there’s really no benefit to getting the newer car other than just to say that you had the newer one.

Bob:
Yeah. The new car smell.

Shawn:
Yeah. Just go get it detailed, and you’re good.

Bob:
You’re good. I have been taking good care of it. You’re driving all the time and there’s really no scratches on the car. The leather seats look great. It’s great. So I’m at six years, maybe I can go four more, five more. Like I said, just put new brakes and I put new belts on it. I put new tires. I’m good, man. I spent a couple thousand dollars doing that. Not 50. The point of buying a new car. All right. Trait number 14.

Shawn:
We should probably read the scripture. Luke 12:15, “Then Jesus said to them all, watch yourselves, keep from wanting all kinds of things you should not have. A man’s life is not made up of things even if he has many riches.”

Bob:
I like that word “things”.

Shawn:
Yeah. So trait number 14, they strive to do things right and are just good people.

Bob:
That’s the country boy. I mean, they do things right and they’re good people.

Shawn:
We have two scriptures for this one, Psalm 34:12-14, “Whoever of you loves life and desires to see many good days, keep your tongues from evil and your lips from telling lies, turn from evil and do good, seek peace and pursue it.” And then we also have Isaiah 1:17, “Learn to do right. Seek justice. Defend the oppressed. Take up the cause of the fatherless. Plead the case of the widow.” Yeah. Bob, you want to give us number 15.

Bob:
Number 15. We’re at the end of that. So, okay. The majority of wealthy people make it slowly and systematically over many years, not quickly and recklessly over just a few. Here’s a scripture again. You’ve heard me say it. You probably got it memorized if you’ve been listening to me. “Dishonest money dwindles away.” But here’s the second part that matters so much. “But whoever gathers money little by little makes it grow.”

Shawn:
That’s Proverbs 13:11.

Bob:
In all 15 of these traits, did you ever hear me mention high investment returns one time?

Shawn:
No. I think I technically mentioned it, but in a different context.

Bob:
That’s because investment returns do play a part in obtaining wealth, but it’s not what makes the average everyday person wealthy and how they keep it. It’s the simple things like consistently saving, living a disciplined lifestyle, hard work, doing what’s right. Being honest over many years, that’s what leads to lasting wealth.

Shawn:
So what about high investment returns then? I mean, while they are important, there is a flawed logic behind chasing investment returns. Now that’s because there will always be someone who did better than you did, someone who did worse when it comes to investment returns, chasing investment returns from year to year and moving from advisor to advisor is like getting stuck in a traffic jam, believing you’re going to beat everyone else by switching lanes enough or even exiting the freeway onto the side road or the access road only to find you didn’t get to your destination any faster, partly because guess what? Everybody else, a bunch of other people also try to go on that feeder road. A bunch of other people also were switching lanes.

Bob:
I’ve learned this from experience, by the way. When I put this example in there, I was thinking, yeah, I’ve seen myself and you look up ahead. And I was like, why did I exit off on the feeder road? Why didn’t I just stay where I was? Cause now they’re just starting to move quicker and I’m stuck at the stop sign and I have to get back up on the interstate.

Shawn:
I guess you could use that example is you’re heading in the right direction. So, even though you may not think you’re going as fast as you should. Cause you need to change lanes. Point is you still are heading in the right direction.

Bob:
That’s right. So, we had those 15 character traits of the average, everyday millionaire that we talked about just like that. I’ve seen six traits that also lead to chasing investment returns. And what stemmed this subject was when we get those calls and it’s all about the investment returns. It’s not about anything else. And that’s where I know somebody is in a chase for the investment return. And these are six traits that I’ve noticed. That first trait is they overly trade stocks, ETFs, and mutual funds that can lead to even gambling type of habits and behaviors. And it really starts with these online brokerage firms. Man, I tell you, when I see these things on TV, they’re persuasive, they use manipulative advertising tactics, convincing novice investors that they can beat experienced, well-known money managers and professionals of Wall Street that have been in the financial business for decades. And every time I see that, that would be like me thinking, there’s no way that I could get on the same field with the Dallas Cowboys or the Houston Texans and compete against them. That would not be good.

Shawn:
Rhonan needs his grandpa around for a little longer.

Bob:
It just can’t be done 99.9% of the time. I mean, not for the long run. You may win for a season, and let me tell you, you notice I put in my notes here about the monkey experiment. Maybe you’ve not heard of that, but have you ever heard me talk about this before?

Shawn:
Still go over it.

Bob:
In the 1990s, they did a monkey experiment and they put a Rolodex in front of them with a bunch of stocks and he…

Shawn:
There are some of our younger listeners, that’s a paper thing that you would flip through to have information.

Bob:
Alright. And so he just went in and the monkey just kind of picked them out, and he picked out those stocks. And this was during the 1990s during the incredible bull market boom, kind of like what we’ve had in the last year.

Shawn:
We’ve had a little bit of a bull market in the last 10 years.

Bob:
Yeah, exactly. I mean, COVID took us out a little while, but we’ve had that back, and the monkey did as well as some money managers back then until we had a bear market drop.

Shawn:
We had a little bit of a market drop.

Bob:
So you can win for a season playing that online game like these online firms that are advertising to you, but you’re not going to beat the pros in the long term. This is going to be for a season.

Shawn:
Think of all those, like, you see CDs all the time, maybe it’s a trading seminar or it’s this, all of a sudden like, oh, here’s this technology that is only five equal payments of $99.95 or it’s a subscription or like it’s only $5,000 and you can get this, and you can make $600, $1200, even $2,500 in a single trade. And what always gets me is it’s really convincing. But here’s my question. If that was actually true that they could consistently do that over time, not just get lucky for a little while. Why are they wasting their time selling it to people when they could have already made millions and millions of dollars at this point? And the answer is simply that it doesn’t work longterm. There’s not a magic bullet that takes a novice investor to all of a sudden be able to beat the market and beat all of these other pros and everything going on. It just doesn’t happen. Not in the long run.

Bob:
Trait number two of chasing investment returns.

Shawn:
It can lead to an emotional rollercoaster. It’s tied to only how well the markets do from day to day. Yeah. And I know from working here with you, Bob, like we have some clients that, maybe when they’re first getting to know us, I feel like it’s understandable that they’re kind of figuring out can they actually trust our team, but they’re looking at the markets every day and…

Bob:
And it becomes an emotional roller coaster.

Shawn:
Because sometimes, it’s up. Sometimes, it’s down. Sometimes, it’s sideways. But at the end of the day, usually what happens is, is at some point they realize the methodologies and the management practices that we’re using here. It’s not meant for from today to tomorrow. We’re looking at larger cycles than that because we’re investing wisely. And obviously, yes, we’re changing depending on how the markets change, but this isn’t a day trading. And so, the only thing that looking at it from one day to the next, every single day, and even during the day does is cause your emotions to go all over the place.

Bob:
And I’m telling you, you’ll start doubting yourself. You get panicky. It keeps you awake at night.

Shawn:
In that case, your emotions are great as long as things are going up and doing well, but then the markets change and you start doubting yourself, you panic, you lose sleep. Like you were saying, you even sell good investments at a low point when there wasn’t necessarily a reason to sell them. And bottom line, don’t allow your emotions to guide your investment decisions.

Bob:
Trait number three is chasing investment returns can really reduce your long-term performance trying to time the markets. I’ve seen this over and over and over. There’s the old phrase, buy low and sell high. Chasing returns ends up being just the opposite. You end up buying high and selling low.

Shawn:
That’s right. So trait number four, chasing investment returns can lead to a misunderstanding of the relationship between risk and reward and understanding how they’re tied to each other. Greater risk does not always lead to greater rewards and returns.

Bob:
Sure doesn’t. You would think that it’s supposed to, but it doesn’t always. Trait number five is chasing investment returns can lead to creating symptoms similar to sudden wealth syndrome. We did a whole podcast on sudden wealth syndrome, or it’s even referred to as SWS, actually, in the psychology world. People who get sudden wealth syndrome.

Shawn:
They get this huge confidence boost that they’re thinking like, oh yeah, I’ve totally got this. No qualification whatsoever other than all of a sudden they have money. And suddenly, that means I know what to do with it.

Bob:
It’s truly a sudden wealth syndrome characteristic that all of a sudden you start feeling smarter than everyone else when you’ve hit it big and get a windfall money from maybe a lucky stock pick or trade or winning a lottery ticket, striking an oil well, or getting a large inheritance. We’ve seen that too. Just because you have some money, you shouldn’t start believing you can be experienced asset managers and advisors. And you may, though, for season in a strong bull market, but that’s only for a season, like we were talking about. How are you going to do in the long run?

Shawn:
That’s right. And the last trait we have of chasing investment returns, trait number six, thinking the grass is always greener on the other side. This could be the case, but most of the time, it’s not. Kind of like we were talking about changing lanes. Advisors, mutual funds, ETFs, and even stocks, contrary to popular opinion, do not control the economy in normal economic cycles. They merely reflect it and at times may even react in seemingly opposition to the economy. What’s that thing, I think you’ve said it before, Bob, that the markets can remain irrational longer than you can remain rational.

Bob:
You mean to tell me really advisors and mutual funds and ETS and stocks that they don’t control the economy. Hmm. Okay. All right. So let’s sum up this. Now, we have really gone deep into this. So we’re going to sum up today’s podcast, high investment returns and wealth. So number one, lasting wealth is obtained slowly and systematically over a long period of time using a disciplined approach, not quickly and recklessly. Number two, high investment returns are always hindsight. Just because you made a good bet three or four times in the past doesn’t mean you can do the same thing in the future. Number three, be aware when you only hear about the good investments that people make, cause that’s what’s going to get in the news. That’s what’s going to be on the social event. That’s going to be the guy talking at the party. Very seldom does anyone talk about the investment that they lost money on.

Shawn:
Number four, higher returns normally equal a greater risk of losing part or all of your principle and are on a longer-term commitment to be able to ride out that volatility. Number five, don’t believe the lie of it’s so easy, a baby could do it.

Bob:
That’s an old commercial from a long time ago.

Shawn:
And unless you happen to be just in the right timing of the market, where literally a monkey could do it just as well, but you never really know if it’s that period of time and when that’s going to end. Number six, the majority of people do not invest their way to wealth. They save their way to it.

Bob:
That’s the saying of Shawn Peters.

Shawn:
Investing will not save you from saving. That’s how I put it. And number seven, lottery winners, oil strikes, and inheritances are far and few between.

Bob:
So there you have our thoughts on high investment returns and wealth. And I hope this has helped you. And I want you to know, this is not to say in any way whatsoever that good investment returns do not play a part in creating wealth, but for 99% or more of us, it’s only a part. So they play a part, but it’s only a part in creating wealth – lasting wealth. You’re only looking at one side of the coin. So, it’s the 15 traits that we talked about today that will get you there, not investment returns alone. And remember, investment returns can be like the wind, which is here one day and gone the next.

Shawn:
All 15 of the traits of millionaires we discussed today will posted on our podcast website christianfinancialadvisors.com/podcast. You can also call 830-609-6986 during business hours for Christian financial advice.

[CONCLUSION]

That’s all for now.

We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.

[DISCLOSURES]

Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors, also known as Christian Financial Advisors, a registered investment advisor. Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host, Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.