fi nancialforum Keep It Simple A

Financial Calculators MOAA’s financial calcu- lators (www.moaa.org/ calculators) can help you determine the future value of your stock op- tions, how inflation and taxes affect your bottom line, and more.

46 MILITARY OFFICER FEBRUARY 2016

Ignore the media and fi nancial-sector buzz. Successful investing comes down to simple, proven, boring strategies. By Lt. Col. Shane Ostrom, USAF (Ret), CFP®

Andrew Feinberg, a contributing columnist for Kiplinger, wrote an article in the November 2015 Kiplinger’s Personal Finance magazine about the dif- fi culty of managing investments to beat the market. Feinberg is an intelligent person who ran a hedge fund with a staff of equally smart people. They spent their lives trying to be successful for their cli- ents and for the challenge of beating the market. However, they lost, and they are not alone when you consider how few mutual fund managers ever beat the mar- ket. Even the ones who do beat the mar- ket only do so for limited amounts of time before they revert back to the norm. This, combined with the article “4

Investing Rules to Live By” on page 50 of that magazine and the book DIY Finan- cial Advisor, A Simple Solution to Build and Protect Your Wealth (Wiley, 2015), creates an interesting fi nancial story. Given the overwhelming evidence about the diffi culty of beating the market, why do ordinary working people like us think we can do it? Data indicate the pub- lic’s inability to actively manage invest- ments. We fail because we think actively managing investment selections and tim- ing our buys and sells is the way things are done. We have been so conditioned by

various sources to think of investing as a complicated trading process that many of us believe investing for our fu- tures is more luck than it is planning.

Often, many think investing is nothing more than gambling and that the deck is stacked against them. Too often, I’m drawn into discussions

about trading stocks or mutual funds, hot tips, “put” and “call” options, alternatives (investments outside the stock and bond norm), investment programs off ered by insurance fi rms, and even penny stocks. My response usually is disappointing to most because I always state all the com- plexity, costs, and risk are not necessary. Investing should be simple and bor- ing. And neither the Koch brothers nor George Soros has anything to do with you building wealth. That’s where the “4 Investing Rules” article and the DIY Financial Advi- sor book come in. Successful investing comes down to a simple plan, discipline, and ignoring the media and fi nancial- sector noise. Fact is, we can all be suc- cessful, but success rests with simple, proven, boring strategies and not fl y-by- the-seat-of-our-pants investing or fancy trading programs. Two key investing rules to always keep in mind are: 1) If it sounds too good to be true, it probably is, and 2) Never invest in anything you don’t understand (regardless of how persuasive the salesperson is).

MO

— Lt. Col. Shane Ostrom, USAF (Ret), is a CFP® and benefi ts information expert at MOAA. Visit www.moaa.org/fi nancialcenter for other re- sources. Email specifi c benefi t and fi nance inqui- ries to beninfo@moaa.org.

PHOTO: SEAN SHANAHAN