Shanghai Family Finance

Times are looking tougher all over. Ironically, this may be the best time to get your boss involved in your finances. You need to save for the big goals of your life, he needs to run a business – and there has never been a worse time for either of you to try to find a new situation. Here’s a hint for you hot shot negotiators – lower your stress levels, get the best deal and give your CV a real boost. How? Negotiate for a long-term contract with your present employer.

1. Talk about the long term – and not about your opportunities to job-hop. Bosses tend to divide the universe into two groups – those that they can trust and those that they can’t. In many cases, this is a much higher priority than ability, intelligence or even honesty. You want to start talking about a minimum of 2 years, but 3 -5 (or more) is best. This is a great time to start talking about a big move up, like running a branch, your first VP position. In China, long term is 2.5+ years, and you should be enhancing your negotiating position considerably by going to 3+ years.

2. Be creative. Propose a vesting plan, or maybe a co-pay savings or insurance plan. If you’re saving anyway, this may get you the biggest bang for your buck. The key here is to control the vesting period (short – after 1 year, 20% is good and the whole thing should be yours in 3 – 5), the co-pay (higher is better. Anything under 25% is problematic)

3. Be the one to bring it up – but make it an ongoing conversation. Your boss is probably used to hit-and-run negotiations that feel like extortion. The idea of a long-term, win-win negotiation may take a while to get used to, so don’t expect him to agree at once. Bosses like it when ambitious managers talk about the long term, though, so don’t be afraid to ask for advice about how to play a bigger role in the company.

4. Don’t be crazy about numbers. This type of negotiation only works as part of a long term deal. Don’t look dim, crazy or mean by asking for a 75% increase. And for heaven’s sake, keep it friendly. In this economic environment, any take-it-or-leave-it ultimatum is likely to get you shown the door.

5. Stay the course. Once you declare your intentions and get the deal-points you are after, you have to put in the time. Stop thinking in terms of 6 – 9 months, and start looking at 2 – 3 year planning horizons.

The problem with traditional real estate is the sheer magnitude of the investment, the illiquidity and the lack of cashflow.  And of course, there’s the leverage issues.  But now new techniques are making it possible to add real estate in manageable increments.  If you are an expat in China and haven’t looked into buying overseas investment property ‘off the plan’ - or in pre-release, then there is an exciting new option for you to investigate.

Off plan investors and getting in BEFORE the ground floor is even built. Its early stage investing — the kind traditionally only available to insiders and institutions. When the project is still in the
early stages and developers are working “off the plan” instead of with completed model units, you have an unparalleled opportunity to score significant gains. Proper due diligence and risk management
- and careful selection of the right partners and consultants – maximize potential ROI.

Why is this kind of investing so interesting to so many people? For comfortable earners who have already covered the basics, property is the next logical step to a diversified portfolio.

How do you judge the merits of a project? Make sure to ask questions about these factors:

• Diversification.
Off-plan investing is a great way to diversify your holdings in terms of asset class AND geographic risk. But don’t make any assumptions. Be sure that the project you’re looking at isn’t just putting some of your eggs on the other side of the same basket.

• Risk vs. Profit opportunity.
Off plan investing makes you an insider – but it exposes you to new types of problems.
You shouldn’t expect to earn outsized gains without additional risk.

• Tax efficiency.
Making money is one thing – holding on to it is even harder. People promise you the world when
they are trying to sell you an off-shore investment, but the fact is that laws and regulations are in constant flux. Make sure to investigate all of your options in advance. Once you’ve sold, it’s too late to start planning a tax
strategy.

• Currency.
International investment means a wide range of currency options – and the headaches that go with it. Many international investments require you invest in a currency you don’t plan on ever using. Make sure you understand the ins and outs of currency and exchange rates.

• Professional management and due diligence.
You need to do both top-down and bottom-up analysis of your project – and your team. Bottom-up means starting at the very basic level and moving up to the general. You’ll
want to know about the local economy, the rental and resale markets – and at the quality of the people doing the actual building and management. Once you’re satisfied, move up to the next link in the business model and find out everything you need to know. Top-down analysis starts by looking at the most general assumptions possible and then getting more and more specific. We start by looking at the broad economic, political and financial environments, and then gradually becoming more focused on the nuts and bolts of our project.

Everyone looks like a genius when the bulls are running and stock indices just keep climbing. But just when you need serious, innovative recommendations the most, the average independent financial advisor runs out of ideas.

A competent financial advisor should be able to offer you 3 levels of service:

1. Big picture set-up. Setting up and being ready for anything. If your guy is still showing you a couple of whole-lifesavings plans with 8 & 12% annual returns, then you need to raise your game.
2. Alternatives investment ideas. Your guy should have enough arrows in his quiver to deal with a range of market conditions. All equities all the time is not for all investors. There are plenty of new instruments, including market-neutral (investments that don’t move in tandem with stock market indices), guaranteed return, debt and special purpose financial vehicles out there. The only catch is that a financial consultant has to have the firepower to analyze and integrate these products into a larger offering. For many IFAs in China, this is beyond their abilities.
3. Estate planning and contingency planning. What happens to your carefully constructed financial plan if things go awry? Illness, unemployment, industry or regional downturns are all real possibilities. What happens then?

How can you know if y0u are speaking to an all-weather partner or a fair weather friend?

1. Balanced market orientation. They acknowledge that bear markets are a possibility, and have a product offering that makes sense in down markets. Beware of the IFA who only reps a straight insurance based savings plan. This guy can talk about dollar cost averaging until the cows come home, but the fact is that this is a bull market strategy
2. In-house portfolio management capability. This is what you’re paying for, so you had better make sure that you know what it is and have some kind of system for assessing it.
3. A strategy based approach – not a product driven approach. Any financial advisor can recommend an insurance-based savings plan during a bull market a look like a star. Their clients will tell a different story these days.

People aren’t really talking about 12 – 15% YoY returns anymore. Last year’s know-it-alls are much quieter these days — because they don’t have much to say. Most financial advisors in China have never lived through a bear market and have no idea how to handle it. They don’t have the products, the experience or the strategy to give you advice or to transact on your plans.

In the long run, finding a good advisor is much more profitable than finding a good stock or fund. You’ll have to do your homework, speak to a lot of candidates and perform your due diligence. Even if you have to kiss a few frogs, eventually you’ll find your prince (or portfolio manager) in shining armor.

Expats in Shanghai often feel richer than they did back home. In many cases its true – some are paid more, others get bigger bonuses and commissions, companies pay for such big-ticket items as housing, education and driers – and the relative gap between western salaries and local pay allow expats to enjoy a lifestyle that would be several pay grades up in the States or Europe. We have maids, drivers, baby-sitters, assistants – and all the headaches that come along with a super-sized household in a land where the laws, regulations, customs and standards are all very different.

Wealth management is a phrase that usually applies to high net-worth individuals who turn over their financial affairs to a dedicated team of advisors and professionals. In China expats may suddenly find that they are the recipient of a lot of marketing attention from IFA (independent financial advisors), private bankers and consultants all offering wealth management services in China. What’s this all about, and do you need it?

What is Wealth Management?

Think of it as private banking on steroids. In terms of financial services, wealth management breaks down into two categories: More and Better.

More Services: High-level private banking and wealth management clients get more options. They aren’t offered savings and checking accounts – they are offered comprehensive cash management services that include credit lines, high-interest savings plans and offshore banking options (which are a key consideration in China). They have an army of service providers lining up to offer everything from high-risk high-return hedge funds & structured products to specialized insurance plans to credit lines & mortgages. Just as important to the wealth management client is the personalized service and boutique approach that insures that Mr. High Net Worth isn’t inundated with phone calls and emailed offerings.

Better Services: The personalized care is what separates boutique wealth management firms from the online financial supermarket of confusing offerings making conflicting claims. Wealth management firms offer clients a private consultant or advisor who manages a team of experts. They analyze their clients needs, help establish goals (one of the highest value-added services a financial advisor can provide), and then design a portfolio and savings plan that will manage the household’s finances. Think of the wealth management consultant as a physician at the center of a large network of specialists, technicians and institutions. His job is to understand your needs better than you do – and then to identify and oversee the procedures being administered.

Wealth Managers and the China Expat Household

So what does this mean to you here in China? Back home you and your wife or husband were probably more than capable of operating a bank statement and an ATM card. Back in Brooklyn or Boston, your biggest financial concern was probably a lack of financial assets. But then you came to China… and suddenly simple financial management isn’t so simple or manageable.

What can a wealth manager do for the new – and temporary – pampered class here in Shanghai?

1) Overseas banking.
Local banks just don’t cut it. They don’t offer the range of services, the products, the people or the international transactions that most western households need. It is crucial that you set up practical, effective banking facilities early. Nothing is more frustrating that being denied access to your own money in an emergency. At the minimum, you need an offshore account (including credit card) that can be used in China, HK and back home.

2) Continuation of financial planning.
You had a plan before you left home, and now you have to figure out a way to keep it moving forward. If you’re an engineer getting paid in dollars with an 18 month posting in Suzhou, then you can probably keep your 401K and savings plan going without too much help. But all too often an entrepreneur comes to China for 6 months and stays for 5 years. In many cases, financial planning takes a back seat to more pressing commercial demands. At the minimum you should be sitting down with a planner every year to help establish goals and understand what is required to meet them.

3) New products and services
Finance isn’t a stodgy world of savings and checking any more. There are new instruments, products and technologies being applied to a world that is rapidly transforming and globalizing. It’s your responsibility to stay informed, and a good wealth management consultant can really help out here.

4) Tax planning
Most wealth management advisors aren’t bona fide tax experts, but they deal with them all the time. If your advisor isn’t saying things like, “the tax law states xyxyxyxy, but you should really speak with Bob Smith the tax expert to find out how this affects you” then you are not getting the level of service you need.  Wealth management companies are very sensitive to the tax ramifications of every product or service they work with, and will help you know what questions you should ask – and who you should be asking.

5) Access to experts
More than anything else, wealth management firms are collections of specialists and experts working in project-management groups – and you are the project they are working on. Need a qualified account, tax expert, lawyer, corporate finance advisor, or compensation consultant? Wealth management consultants should be able to help. These firms spend a lot of time searching out (or being sought by) the best new people, products and services to offer to high net worth clients.

Whenever markets are headed south, financial planners start banging the drum about “Dollar Cost Averaging” as a framework for managing your long term investments. Judging from the international markets’ recent performance, it’s about time for a quick DCA review.

What is DCA?

DCA is a method for long-term investing that assumes two things. 1st, you will be investing a regular amount every month for at least 10 more years. 2nd, markets will fluctuate.

DCA investors have moderate tolerance for short-term risk and no knowledge of future events.

The principle is simple. You begin by selecting a fund or asset that you can invest a set amount in on a regular basis. This includes stocks, funds, insurance-based savings plans and bonds.

It’s important to believe in the investment target AND/OR your advisor because the basic idea is that you will continue putting money into the market even as the value of the investment drops.

The overarching principle here is that good stocks don’t lose value in bad times — they go on sale.

How does it work?

You decide to invest $1,000 per month (or $12,000 per year) in Slow & Steady Inc. You have assessed and analyzed and feel that SNS Inc has great long-term prospects and meets your investment goals. (Alternatively, SNS was picked by a trusted advisor and you have no plans to second-guess him).

On month 1 (M1) you invest 1,000 at a unit price of 5, which buys you 200 shares.

M2, SNS share prices fall to 4. Your initial investment is now valued at only $800, but you stay with the program and invest another 1,000, which now buys you 250 shares. Your total investment: 2,000. You hold 450 shares, your average price per share - 450/2000 = 4.5. Your holdings are worth $1,800.

M3 the markets are still finding a bottom, and a share of S&S now sells for only $3 per share. You stay the course and buy another $1000, or 333 shares. You now own 783 shares worth an average of $4 per share for a total investment of $3,000 which is now worth 2,350. You are suffering a temporary paper loss of around 22% of your investment value ($650).

M4 is even worse, and now those SNS shares are only selling for $2 per share. Your 1,000 buys you 500 shares, though your total holdings of 1283 shares is now worth only $2,567 – or 36% underwater. .

M5. The sun is shining again and your shares have recovered some of their value. The price has suddenly doubled and now stands at $4 per share. You stay with your plan and buy another 250 shares for a total of 1,000.

Where are you now?

Your total holdings of 1533 which you bought for an average price of 3.6. Even though your shares are still under water, your investment is now worth 6,133 compared to the 5,000 you put in. Your return? $1,133 - or a little over 20%. Not bad considering you didn’t panic, stress out or take on additional risk.

Shanghai expats are witnessing a dual bear market, as indices in Asia and the west get hammered. Markets are down all over, and many disgusted investors are considering ditching all the funds and equities they own and heading to cash bank accounts. This may make sense if it is part of a well-considered long term plan. If, however, you are motivated by panic and fear you should take deep, calming breathe and get your bearings. Selling at the bottom of a bear-market correction is a sure-fire recipe for big losses and a wrecked financial plan.

When is cash not king?

1) Buy low, sell high.

a. This is what they mean when they say “buy low”. That’s why it’s hard. You’re the only one buying – and everyone thinks you’re nuts.
b. Dollar cost averaging means that the companies you liked last year at 100 are on sale now for 68. As long as the company’s long term economic prospects haven’t changed, it’s a bargain.

2) What’s your plan?

a. Sell long-term holdings now and you may be triggering a taxable event.
b. Where will you put the money? Do you have options prepared? This is particularly true if you have off-shore assets that you plan on liquidating. You’ll need an orderly and tax-protected landing-pad for your newly liberated cash money.
c. What will this do to your long-term planning?

3) How much worse will it get?

If you honestly believe that the market has another 20 – 30% downside in the near term and you are comfortable trading your own account, then maybe this is a good time to head to the sidelines. If you believe we are at the bottom, this is the time to buy – not sell.

4) Do you have alternatives to equities and funds.

Cash is poison in an inflationary environment. Bonds may be ok in a while, but for now yields are being pulled in two directions as some central banks cut rates to shore up industry while others are raising rates to fight inflation.

5) You will miss the upside move.

This may not seem like a big deal right now, but those who move to cash when markets fall are almost certain to miss the first big moves of the turn-around. Market recoveries tend to lead the economic rebound and are thus notoriously hard for investors to catch. However frustrating it may feel to ride the trend down, it will hurt much worse if you miss the recovery.

Before you try any tricky international finance moves, check with your financial advisors and planners to make certain you are not causing a bigger probem than you are trying to solve.

There was a time when clever expats could say – ‘if worse comes to worse I can always give up my (your country name) citizenship to avoid the tax man’. If you are from the US, even that drastic option has been taken away. According to Terry Savage in a recent post from The Street, the US has just passed a new law that penalizes taxpayers who want to switch nationalities to avoid taxes. http://www.thestreet.com/story/10423687/1/youll-pay-if-you-give-up-us-citizenship.html

In her article of June 29, Ms Savage drops this bomb on the expat community:

‘Congress just passed a new law that will stop your capital — or at least a good portion of it — at the border, should you decide not to be a U.S. citizen anymore. Is it, perhaps, in preparation for the possibility that Americans might rebel at the debt and taxes incurred by their government by leaving for lower-tax locales?

You probably didn’t notice this little provision inserted into the Heroes Act of 2008, passed by Congress on June 17. The headlines in the press release about the law were about the increased benefits for veterans and families of deceased military.

But Richard Kohan of Price WaterhouseCoopers drew my attention to one section of the act, which states that anyone voluntarily giving up his or her citizenship will be taxed on all of his assets as if he or she had sold them — paying capital gains on assets that have increased in value, even though they have not been sold.‘

All expats must grapple with the tax regulations in at least two jurisdictions, but for Americans the burden tends to be a bit heavier. The IRS allows you an overseas exemption of around US$80 k, depending on your circumstances, but then treats the rest of you earnings pretty much as though you’d never left home. Europeans are finding that their rules are getting more restrictive as well, as the EU takes its lead from the IRS and puts even more teeth into rules like the dreaded European Savings Tax Directive.

What can you do to legally avoid paying unnecessary taxes? Well, first of all you have to acknowledge that this is your responsibility – and it’s a big one. You can’t be passive about your international tax planning. Your CPA back home may not be particularly strong on the international regs & laws, so have an honest discussion with him about his resources and limitations. And if you are using a pay-as-you-go tax service, then you can bet that their expertise ends at the border.

If you live anywhere near a big commercial city in China then you have resources near at hand. There are plenty of tax experts, financial planners and advisors available in your area to help you get a handle on your cross-border finances. The key is to start planning early and make your first step education. If you try getting your international house in order a few weeks before returning home, you may find that the tax man is among the people looking forward to a nice long visit.

Let’s assume that you are 33 years old and want to retire at the age of 60 – and you plan on living until you are around 90 (or put another way – plan on living off your retirement savings for 30 years) with a post-retirement income of US$ 85,000 per year.

How much will you need to retire? How much do you have to save?
You will need a balance of US$2,598,932 to provide you with a cash stream of US$85,000 for 30 years.

If you are 33 years old, that means you must invest US$1,934 every month for the next 27 years to reach your goal.

But what if the numbers don’t work? What if you can’t save that much?

There are really only 5 proven methods for getting a financial plan back on track:

Earn more. The more you earn the more you can save. But since most of us are trying to earn as much as we possibly can anyway, this option may not be very helpful. Still, for those with a choice, the stark reality of the numbers makes some decisions clear. Working for the family business may not be as appealing as working with underprivileged kids, but you can’t live off warm-fuzzy feelings when you’re retired.

Start Earlier. If our friend starts saving when he is 33, he will need to put away $2,000 per month. If he waits until he is 43 to start planning, his monthly requirement jumps to $4,000.

Work longer. Some people dream of an early retirement, but it doesn’t come cheap. You pay for early retirement in two ways – you have less time to save (because you are quitting earlier) and living off your savings for longer. In the scenario we described above, a 33 year old who retires at 60 and will live until 90 needs to save rough $2,000 per month to maintain his lifestyle. If that same guy decides to work until he’s 65 instead, his month savings requirement drops to $1,300.

Retire cheaper. The less you need to live on, the less you have to save. If we go back to the original scenario – 33 year old retiring at 60 with an income of US$85,000 per year will need to stash away roughly $2,000/month. But if our friend could bring his post-retirement spend down to $70,000 per year he will only need to put away $1,600.

Stay healthy. Nothing undermines a solid financial plan like illness or injury. Quite smoking, hit the gym more often, quit skydiving and avoid sick people. Tai chi is supposed to be good, too. The Blue Angel and the rest of Tong Ren Lu are probably not as therapeutic as we like to tell each other. Just a thought.

Take a look at the June 12 edition of The Economist for news that will either frighten you or lift you to new heights of self-satisfaction, depending on your situation. It seems that more and more retirees are completely unprepared to live out their Golden Years in anything close to the style they had thought about.

The Economist article, entitled “Falling short; Workers are sleepwalking towards an impoverished old age” can be found at
http://www.economist.com/finance/displaystory.cfm?story_id=11529345.   It’s a bit more technical than most of the newspaper’s work, but I saved you some time by cutting out the most frightening bits:

Britain’s Pensions Institute points out: for “financial products extending over long periods of time, many consumers are clearly not well-informed or well-educated. The retirement-savings decision needs accurate forecasts of lifetime earnings, asset returns, interest rates, tax rates, inflation and longevity; yet very few people have the skills to produce such forecasts.”

The result may be that many employees face retirement with an income well short of their expectations. An employee who pays into a DC [defined contribution] scheme for 40 years may get only half the retirement income he could have expected under a final-salary system. When pension experts were polled by Watson Wyatt their biggest concern was that DC schemes will yield inadequate pensions for DC members. As the Pensions Institute paper says: “When the plan member eventually discovers how low his pension really is, it is by then too late to do anything about it.”

What can you do to make sure that your retirement turns out the way you have been planning?

1) Do the math. There are lots of online calculators and services that will help you get a rough estimate of just how much you’ll need to retire.

2) Use better assumptions. Your grandparents retired at 72 and may not have lived much past 78, if statistical averages hold true. For high earning executives with access to the best health care, the numbers may be very different. You may plan on retiring at 60 and living past 90. That means you’ll be funding 30 years of retirement – not 6 or 7. This is great news – if you’re ready.

3) Start planning early. If you’re in your 30s, then it’s unrealistic to guess about where or even when you’ll retire. But you can start making some assumptions and start making them a reality.

4) Consider alternatives to a traditional retirement. 20-somethings always seem to want to retire at 35, but plenty of more mature folks don’t want to stop working at all. Who’s right? It may turn out that they both are. If your idea of retirement is working on your own vineyard, starting a non-profit of teaching at university then those things will all have an impact on the amount of money you’ll ultimately need. Keep an open mind and build realistic plans.

5) Start working with a trustworthy team of advisors and financial service providers early.
Plenty of otherwise responsible decision-makers spend more time selecting a contractor to fix a roof than choosing a financial advisor to keep that roof over their head. Most reputable financial consultants offer a free analysis of your situation. Take them up on it. You may be pleasantly surprised to hear how well you’re doing – or shocked to learn how far you have to go. Either way, it’s best to find out early.

Step 1 — Make a lot of money.  Ok, we didn’t say the steps would be easy — just not complicated.  So, Step 1 is about making the money — and making it work for you by doing sensible things with it, like avoiding unnecessary taxes and reducing fees.  Step 2 is spending it — on the right things like tuition, retirement and real estate.  Face it –  you LOVE spending money, as long as its on yourself and your loved ones.  The key here is to make sure you know what your spend will be — as early as possible.  Step 3 is about keeping the money within your household and making certain that your assets go to the people you want to get it at the time you want them to get it.  

Financial planning isn’t just about investing anymore.  While planners like to talk about offshore savings and investment, they are just part of the mix.   A thorough, integrated financial plan should also include life insurance, health care plans, disability insurance, tax planning, wills and trusts.  

There are 3 general phases to the financial planning process:

Phase 1) Making money. 
Priority:  Savings and offshore investment.

This is when you start building your nest egg.  At the beginning of this phase, your lump-sum or monthly contribution is driving the build-up of cash.  After a few years, however, the interest you receive is compounding to the point where your assets are growing exponentially.  Planners sometimes talk about the Rule of 7 – With a 10% return, your investment will double in roughly 7 years (and with a 7% rate of return you will double in 10 years).  The earlier you start, the higher the return, and the longer you leave the money invested, the stronger the impact of compounding. 
 

Phase 2) Spending money.
Priority:  Tuition. Retirement.  Real estate.  Big gifts for the kids. 

Most of us are saving for a specific reason.  You don’t go to a financial planner to help pay for your weekend vacation – but you might need a planner to help you figure out when and how you can retire. Spending money on big-ticket items is great — if you’ve prepared the funding in advance.  Seeing your first child graduate from university should be one of the high points of your life – but it may cost you as much as US$160,000 (in 2008 terms) to see it happen.  Any competent planner is going to help you identify your obligations and show you how to prepare for it.  The better ones will go so far as to tell you which of your goals is out of reach and what kinds of sacrifices you’ll need to make to achieve those that are possible.  Heed his advice early, or you’ll run the risk of incurring heavy debts and wrecking the financial structure you’ve worked so hard to build.  

Phase 3) Keeping money.
Priority: Tax planning.  Estate planning.  Wills.  Trusts.  Offshore banking.

The goal here is to keep the money away from the tax people – legally and prudently.  Wealthy individuals have always had access to the best minds and tools for shielding their assets from taxes, and now you can as well.  One of the advantages of working with a professional financial planner is that they are able to leverage the power of their pool of clients to negotiate better deals and get you access to professional services that would be beyond the reach of most investors.  Your planner will show you how to use offshore accounts, trusts and insurance products to avoid paying unnecessary taxes.  Unfortunately, you will also have to make provisions for what happens to your estate after you are gone.  Wills and trusts are small acts that will have a huge impact on your family in the event of your death.  It’s never too early to discuss estate planning with a trustworthy advisor. 

Preservation of capital also covers buying the proper insurance.  Life insurance is a requirement if your family relies on your earning power.  It’s really that simple.  But you should also consider health insurance part of your financial plan.  Nothing will upset your financial plans like serious illness – particularly if you are overseas.  Don’t be fooled by the low cost of a doctor’s visit or a prescription in China.  If you have any serious problems, you will probably need a level of care that far exceeds the capabilities of your local clinic.  If you have to go to Bangkok or Tokyo for treatment then you and your family will be paying for travel as well as top-notch medical care.  It starts out high and moves up quickly.  Without proper insurance coverage, you can find your savings wiped out in a hurry.   

Another type of insurance appropriate for SOME ex-pats is Income Protection, or disability insurance.  This type of coverage replaces your income when you are unable to work for a prolonged period.  Be warned, however, that this type of insurance is very pricey.  It makes sense when you have specific obligations to meet for a short time – like tuition payments.

Whether you use a professional financial planner or do it all yourself, make sure that you have a strategy for meeting your future obligations and goals.  The biggest single mistake you can make isn’t choosing the wrong investment – it’s failing to have a financial plan.