One of the phenomenal trainers in my learning community smiled as he shared his Zoom screen. He was displaying a spreadsheet of his portfolio. He accidentally scrolled over too far and revealed information that he did not intend for us to see. Oh well! Continuing to smile, he said, “I’m almost embarrassed at the numbers when I projected out over 15 years. I’m still young, and I’m thrilled at the astonishing rewards awaiting me!” My mouth fell open as I caught a glimpse of “the number” at the 15-year mark. I was shocked.
His portfolio was a collection of the newest product offering of our blockchain project. It is an innovative fintech (financial technology) product, like others that are coming at us quicker than we can blink. This one is a banking product similar to a certificate of deposit. It has an income “engine” which generates immediate funds for withdrawing or compounding. It is coupled with a growth “engine” designed to increase the account value over the duration of the contract.
Though similar to a certificate of deposit, our fintech product differs in three major ways. First, it is housed in a smart contract on the blockchain. (Please research these terms if they are not familiar to you.). Second, it must be purchased with cryptocurrency rather than U.S. dollars. And third, it is traded in the international forex market rather than in U.S. stocks, bonds, mutual funds, etc. These certificates are yielding rewards greater than the banks and brokerage houses, because they are trading in the same forex (foreign exchange) markets that the big banks use.
Evaluate the Power
As I sat in the training that day, learning how to evaluate the power of the new product, I reflected back to the classic tool for evaluating the power of any investment product or strategy– the old-fashioned spreadsheet. This instrument brings clarity by revealing the future impact of current decisions. Decisions that will eventually play out positively surface in plain view on a spreadsheet. This allows us to hold the treasure in our hands right now – in the present moment! How wonderfully motivating is that? On the other hand, decisions that are destined to trend negatively will glare at us from the page of the spreadsheet. This will pull the future pain into the present, giving us time to safely re-calculate and avoid living through the distress. A properly planned spreadsheet is the next best thing to a crystal ball.
Every spreadsheet will spell out three things: the principle (our contribution to the plan), the interest (potential gains) and a time element (how long contributions and interest are allowed to work). As we make decisions and search for realistic options for our personal circumstances, we want to maximize these three factors. We’re looking for answers to our financial questions. What amount we are willing or able to contribute to the principle? How long will we need to make the contributions in order to reach the goal? What are the most favorable, available interest rates? What are the options for compounding? When can funds be withdrawn from the account? Once withdrawals begin, how long until the well runs dry? Will any funds remain as a legacy for the next generation?
Zeroing in on the interest rate component, we discover a problem in today’s economy. There is currently no place for us to earn a reasonable rate of return.
- Bank savings accounts are paying .01% to .06%. Really! That’s all!
- 401k plans average 5% – 8% a year.
- Stocks average 10% – 15% (but are currently in an extended bear market).
- Bonds are at 5% – 7% a year.
My heart breaks when I look at these numbers, because I remember when the common investor had a chance at building real wealth. I built my retirement from 1980 to 2007, utilizing what I called the 20/20/20 plan. I was blessed with a generous, six-figure salary and I was able to contribute 20% of it per year to my retirement plan – for over 20 years. Then I was able to earn just under 20% annually on these funds, which were invested at the institutional rate. Spreadsheeting those numbers results in a nice size nest egg.
But that’s not the end of the story. Like most people, I lost 40% in the stock market crash of 2008. An enormous market upturn would be required to make up for a loss of this magnitude. It’s now 14 years later and no such recovery has occurred yet, nor is anyone forecasting that it might happen anytime in the foreseeable future. Additionally, I lost money in real estate in 2008, and in a business purchased in 2012. My early retirement at age 55 left me with potentially 40 years or so to live on the dwindling funds. Inflation, rising medical costs and the possibility of declining health are chipping away whatever remains. So, despite successful planning and saving, I could still be in trouble.
Put Money to Work
Except (returning to the opening story) I have found that the secret to staying out of trouble and securing the future is to identify new ways to put money to work, getting good returns like in the old days or even better. With good training I have created my own spreadsheet to plan and monitor portfolio projections. The future looks good. And so, I’m smiling!
As old money strategies are failing us, new technologies are opening up better opportunities. The right education and the right learning community are key to finding the right, personal financial solutions for each of us. Once we plug all known variables of the new economy into a good spreadsheet, we can gain confidence that our plans are valid and our future secure. So, get educated, get in a good community, spreadsheet your life, and smile with us.
Find more articles from Gail here.