The Roller Coaster
A few years ago my family took a trip to California. While we were there we visited Six Flags. If you have been there then you know about the roller coaster called “X”. I had never been to Six Flags before, and didn’t really know what to expect. There’s always been a certain amount of tension between me and roller coasters. It’s not to say that I don’t enjoy them, I do. I guess it has a little to do with the handful of stories you hear each year about someone getting stuck on a ride, losing an appendage, or even their life!
I suppose all of these factors add to the thrill of the ride, and ultimately the relief when we step onto the platform at the end with our heads still intact.
Back to “X”. We waited in line for about 45 minutes. All the while listening to people jitter and fret about the ride. As I observed the crowd I could easily pick out the people who had been on the ride before and the ones who were “first timers”.
When it was finally our turn to board I noticed that the seats we were to get in were facing backwards, and that this wasn’t like any conventional roller coaster car I had ever been in. You actually sit in a chair that is suspended from a rail above your head. The row of chairs is on a swiveling arm and your legs are left to dangle with nothing below you.
We were locked and loaded. The row of dangling, swivel chairs began to move backward up a steep incline while a crowd of onlookers laughed and pointed at us.
I knew from experience that at some point we were going to drop. After all, what goes up must come down... right? I just wasn’t sure when, because I couldn’t see where I was going. Needless to say, we did go down. When this crazy contraption reached the top the row of swiveling chairs turned and pointed us directly at the ground for a perfectly vertical plunge. I’m not exaggerating, it was literally straight down. Everyone freaked out! After falling for 100 plus feet the coaster made a bend about 10 feet from ground level and continued with the ride (which was awesome). video
When the ride was through and we were on solid ground again the scene looked like this: Most of the guys in our group were laughing uncontrollably, my younger sister was crying (which made us laugh harder), and others were in stunned silence.
Many comparisons can be drawn between life and roller coasters, and further, the way different people react to the ups and downs. In this article I’d like to draw some comparisons between money, roller coasters, and people.
First off, people are different. They react differently in certain situations, as I observed the day we rode the coaster. Some people can easily tolerate the ups and downs of a ride. My mother for example cannot. She won’t step foot near any amusement ride. Myself, I enjoy a good roller coaster. The one aspect I dislike is that I feel as though I have given up all control. Being an entrepreneur and small business owner for many years has taught me the value of control. Lack of control gives one the feeling of being trapped, and one has that feeling because they probably are trapped. Just like being buckled into a swiveling chair traveling 75 mph.
When you give up control of your capital you most likely have given up liquidity as well. I’m specifically speaking of giving your capital to a broker to earn you (fill in the blank) return. Being a so-called “insider” in the securities industry for a time, I can tell you with 100% certainty that any broken (woops, “broker”) can in no way predict what ROI they will get you, let alone what Real ROI they will get you. What do I mean by “Real ROI”? Let me explain. A common pitch to hear from someone in the securities industry goes like this,”The market has delivered a 10-12% average over the last ___ years. You’re young, just put your money in this vehicle and let it ride for the long haul. Just keep contributing to your plan and forget about it, I’ll take care of the rest, then 30 to 40 years down the road you’ll have $______ waiting for you to retire.” WHAT!!!?
It may be true according to certain complex formulas that the Stock Market has averaged 10-12% for 70+ years. But what we must realize is that the %return can be “manufactured” and that while you may be earning a 20% average ROI the actual Real ROI which is the actual money coming out of this mystery box we call “The Market” can vary widely.
You invest $1,000 at a 20% average rate of return for two years. How much do you have?
Actually, any of these could be correct:
$1,440 (1st Year=20%, 2nd Year = 20%, Average=20%)
$1,280 (1st Year=60%, 2nd Year=-20%, Average=20%)
$800 (1st Year=100%, 2nd Year=-60%, Average=20%)
$0 (1st Year=140%, 2nd Year=-100%, Average=20%)
A 20% rate of return could mean many different things!
Do you see how things can be manipulated? And I know from experience that anyone in that business will use the formula most favorable to them.
There are a couple of universal truths; There are things that we know we don’t know. And there are things that we don’t know we don’t know. Believe it or not, there are ways to grow your money without putting it at risk (learn more). There are asset classes that are liquid, safe, easy to understand, and work with you and your lifestyle all while helping you to grow and save for the future. Request your free analysis today, learn to see things in a different way, learn something that you didn’t know you didn’t know.
Roller coasters can be fun (for some people). When it comes to money, the thought of a huge up in “The Market” can be exciting, but as a mentioned before, what goes up must come down. When you bank on yourself you control how your money is spent down, and it’s only coming down because it’s your choice.
A few years ago my family took a trip to California. While we were there we visited Six Flags. If you have been there then you know about the roller coaster called “X”. I had never been to Six Flags before, and didn’t really know what to expect. There’s always been a certain amount of tension between me and roller coasters. It’s not to say that I don’t enjoy them, I do. I guess it has a little to do with the handful of stories you hear each year about someone getting stuck on a ride, losing an appendage, or even their life!
I suppose all of these factors add to the thrill of the ride, and ultimately the relief when we step onto the platform at the end with our heads still intact.
Back to “X”. We waited in line for about 45 minutes. All the while listening to people jitter and fret about the ride. As I observed the crowd I could easily pick out the people who had been on the ride before and the ones who were “first timers”.
When it was finally our turn to board I noticed that the seats we were to get in were facing backwards, and that this wasn’t like any conventional roller coaster car I had ever been in. You actually sit in a chair that is suspended from a rail above your head. The row of chairs is on a swiveling arm and your legs are left to dangle with nothing below you.
We were locked and loaded. The row of dangling, swivel chairs began to move backward up a steep incline while a crowd of onlookers laughed and pointed at us.
I knew from experience that at some point we were going to drop. After all, what goes up must come down... right? I just wasn’t sure when, because I couldn’t see where I was going. Needless to say, we did go down. When this crazy contraption reached the top the row of swiveling chairs turned and pointed us directly at the ground for a perfectly vertical plunge. I’m not exaggerating, it was literally straight down. Everyone freaked out! After falling for 100 plus feet the coaster made a bend about 10 feet from ground level and continued with the ride (which was awesome). video
When the ride was through and we were on solid ground again the scene looked like this: Most of the guys in our group were laughing uncontrollably, my younger sister was crying (which made us laugh harder), and others were in stunned silence.
Many comparisons can be drawn between life and roller coasters, and further, the way different people react to the ups and downs. In this article I’d like to draw some comparisons between money, roller coasters, and people.
First off, people are different. They react differently in certain situations, as I observed the day we rode the coaster. Some people can easily tolerate the ups and downs of a ride. My mother for example cannot. She won’t step foot near any amusement ride. Myself, I enjoy a good roller coaster. The one aspect I dislike is that I feel as though I have given up all control. Being an entrepreneur and small business owner for many years has taught me the value of control. Lack of control gives one the feeling of being trapped, and one has that feeling because they probably are trapped. Just like being buckled into a swiveling chair traveling 75 mph.
When you give up control of your capital you most likely have given up liquidity as well. I’m specifically speaking of giving your capital to a broker to earn you (fill in the blank) return. Being a so-called “insider” in the securities industry for a time, I can tell you with 100% certainty that any broken (woops, “broker”) can in no way predict what ROI they will get you, let alone what Real ROI they will get you. What do I mean by “Real ROI”? Let me explain. A common pitch to hear from someone in the securities industry goes like this,”The market has delivered a 10-12% average over the last ___ years. You’re young, just put your money in this vehicle and let it ride for the long haul. Just keep contributing to your plan and forget about it, I’ll take care of the rest, then 30 to 40 years down the road you’ll have $______ waiting for you to retire.” WHAT!!!?
It may be true according to certain complex formulas that the Stock Market has averaged 10-12% for 70+ years. But what we must realize is that the %return can be “manufactured” and that while you may be earning a 20% average ROI the actual Real ROI which is the actual money coming out of this mystery box we call “The Market” can vary widely.
You invest $1,000 at a 20% average rate of return for two years. How much do you have?
Actually, any of these could be correct:
$1,440 (1st Year=20%, 2nd Year = 20%, Average=20%)
$1,280 (1st Year=60%, 2nd Year=-20%, Average=20%)
$800 (1st Year=100%, 2nd Year=-60%, Average=20%)
$0 (1st Year=140%, 2nd Year=-100%, Average=20%)
A 20% rate of return could mean many different things!
Do you see how things can be manipulated? And I know from experience that anyone in that business will use the formula most favorable to them.
There are a couple of universal truths; There are things that we know we don’t know. And there are things that we don’t know we don’t know. Believe it or not, there are ways to grow your money without putting it at risk (learn more). There are asset classes that are liquid, safe, easy to understand, and work with you and your lifestyle all while helping you to grow and save for the future. Request your free analysis today, learn to see things in a different way, learn something that you didn’t know you didn’t know.
Roller coasters can be fun (for some people). When it comes to money, the thought of a huge up in “The Market” can be exciting, but as a mentioned before, what goes up must come down. When you bank on yourself you control how your money is spent down, and it’s only coming down because it’s your choice.
