In my last post, I promised to share some of the investment strategies and solutions that are now personally working for me. One of those solutions is Baton Investing.  Following is the story of how I found out what my husband and I were doing wrong, why we needed better solutions and how I found out about Baton.  

My Husband Laughed When I Said I Was Taking Over Our Investing. 

When my husband walked through the door about eight months ago, we said our “hellos” and per usual, discussed the remains of the day.

Then – probably for the first time ever in our 20-year relationship – I added, “Oh, by the way, I’ve gathered all of our financial statements.”

“Why?” he questioned suspiciously.

With the startling statistics — about the high percentage of women who live in poverty after losing a spouse — still rolling around in my head, I responded, “In case we get divorced, or you die, I need to know where we stand financially.”

He stared at me for a second.  Even given my proclivity to say what I’m really thinking, this was a cake-topper. “Um, is there something you’re not telling me?” he responded, looking nervously around the room.

“Yes. I’m going to take over our investing. I need to be more involved. And anyway, I think we can do better.”

Then, with a look of relief and slight amusement, he laughed.

While my husband’s response irritated me, it was also understandable. He had worked in the financial industry his entire life. He held an MBA. He had been investing since his early 20s. He had a couple of his buddies managing two of our joint investment accounts. And God knows he was always rattling on about how much we need to save. Suffice it to say, the guy knew a lot more about investing than I did. Or so I thought.

In the 20 years I had known him – except for a couple months for both of us – we’d never been financially dependent on the other. For whatever reason, we set up – and still maintain – joint and individual accounts. I’m not sure why we originally set things up that way, neither of us had much to speak of coming into the marriage. Nor do I know that maintaining separate accounts really matters, since the assets accrued during our marriage (including my business) are considered joint. But, in any case, it remains that way to this day.

Since then, for both my personal and business investment accounts, I’d basically done like many women and faithfully handed money over to a financial advisor every month – one I chose, who came recommended to me. But to say I had thoroughly researched her strategy, approach and track record would not be accurate.  In fact – as embarrassing as this may be, I can pretty safely assume I spent more time researching skincare treatments than I did my financial advisor. I digress.  After meeting her, setting our goals, and handing over money to her, I basically left her alone to get on with it.  According to her, my investments were faring “pretty well” – at least that’s what she told me. I was averaging 8.5 percent returns annually. To be honest, the returns didn’t sound earth-shattering to me, especially after paying her fees.  But apparently, compared to other people, and given the ups and downs of the market, that was “pretty good.” Turns out, that average 8.5 percent return was in fact higher than most people’s – including my husband.

This was news to both my husband and me. It also was a fact that made him stop laughing, and agree to my proposed arrangement.

But as I dug more deeply into our financial matters, the stark fact was that there were several challenges that prevented us from both making more money, and saving the amount we wanted for retirement. Old age was a bit of a grim prospect as it was; I certainly didn’t want to spend it eating canned tuna all the time.

The reasons were three-fold…we were:

1.  Underestimating Our Retirement Needs 

Several of our financial advisors underestimated (or we underestimated!) how much we actually needed and wanted to retire comfortably, assuming we’d live 30 years past retirement. Find out the actual amount of money you really need with this quick calculator.   While our financial goals originally sounded like sufficiently big numbers, when I did the math, our future simply didn’t add up. Especially when you consider that even $1.5 million over 30 years will put you close to or even under the welfare line in some U.S. states. Everyone is different, but as an example, if a couple wants to live on $100k a year in retirement, they’ll need to have saved $3 million plus.

2. Guilty of Over-Diversification

Previously, when I viewed our statements, I only really looked at how much money the account made or lost from the month prior. This may seem very lazy to most of you. But I just couldn’t be bothered to look too closely at the actual holdings. This was especially true for my personal IRA and my husband’s 401k plan (turns out, 401k plans are notorious for their abysmal investment choices and results). I didn’t truly understand what my advisors had me invested in – which turned out to be an over-diversified portfolio. As it turns out, owning more than 20 stocks at once makes it close to impossible to outperform the stock market. And between all my mutual funds, I owned more than 1,000 stocks! That makes a big difference. Big. Like tens of thousands, hundreds of thousands, and in some cases, millions of dollars difference.

3. Accepting Average (Mediocre) Returns We were told by many financial advisors – and even my husband subscribed to the theory – to assume a “pretty good” 8-10 percent return over the long-term, the average of the S&P. I remember my husband saying, “As a general rule, you can’t beat the S&P. Particularly people like us – who make decent incomes, but don’t have the time, desire, stomach, or knowledge to actively manage our investments.” He called us “casual” investors. I think he meant “lazy.”

But the fact of the matter was if we didn’t get with the program – and fix these mediocre investment returns (check the calculator) – we weren’t going to get to where we needed to go. Particularly if something happened to me, my husband, or our incomes.

With my findings, I approached him with a plan:

1.   We’re going to double our retirement goal;

2.    We’re not going to accept the conventional “wisdom” of over-diversification and mediocre results;

3.   We’re going to set aside some rainy-day money and put the rest to work in a more aggressive strategy that can double our returns.

I thought it was a great plan.

“Sounds great…” my husband responded, when I told him. “Let’s do that.”

Although I think he was actually pretty happy that I was becoming very involved in our investing, his sarcasm wasn’t lost on me.

But I wasn’t at-all discouraged. I had bigger fish to fry and returns to find.

The only problem with my plan is that now I had to successfully execute it. Initially, I simply wanted to find a smarter method or person who could help us make more money, increase our returns. Since I had learned a few things about investing – mostly from male friends and colleagues, I asked the advice of many of these same people. One of whom, equally frustrated and angered by his mediocre returns (and was in the financial industry), also had looked around for a better solution. Turns out, he found it in an investing system – developed by an MIT engineer and “artificial intelligence” pioneer – that used a computerized model to develop a stock-picking system based on the strategies of the all-time investing greats (Buffett, Lynch, etc.).

And the results were impressive: the system had averaged 16 percent annual returns since 2003 vs. the Standard & Poor’s 9 percent and the “very good” 8 percent my husband and I were told to expect. Again, and as I had come to learn, those percentage differences meant hundreds of thousands and even millions of dollars over the longer-term. The system had worked in the real world and up and down markets for 13 years, but until recently, hadn’t been available to people other than the very wealthy.

If I was currently averaging 8 percent and this system produced 16 percent over the last 13 years, we would have effectively doubled our money by now.  And in 10-20 years, we’d be in much better shape.

Still, I was cautious. I trusted my friend enormously – and he had nearly 100% of his personal investments in the system. But he was smarter about this stuff than I was. How much time would I have to spend (did I mention my laziness)? Also, let’s not forget the fact that my knowledge of and interest in the stock market was somewhat lacking. I wondered if the Baton system was the financial version of one of those “rock hard beach body” programs. Sure they work, but would I have to put in hours a day? I knew I couldn’t do that. Nor did I know how. Or want to.

Then he told us it takes about a minute a month for me to execute the trades. Five clicks based on Baton’s recommendations. That, I could do. And did.

I was convinced and moved a chunk of money over from my IRA. Granted, I’ve only been using the system for a short while, but I’ve been very impressed – as have others – by the results, including my husband. My success encouraged me to now move the majority of my personal and some of my business investments over to the Baton system. My husband is now in the process of moving a percentage of his investments as well.

In fact – and I’m aware this may sound a bit like a “Hair Club for Men” commercial, but I was honestly so impressed with the results, that in addition to investing, I decided to start working with the company. While they didn’t ask me to write this post, I wanted to share my story – and real experience – of using the system, and one of the better ways I’ve found to invest. I thought it made sense to do so because I think often times (and I don’t mean to make sweeping generalizations) women aren’t involved in the investing – at least I wasn’t. And I thought it made sense to share as we talk more about women and investing, women’s financial security, and women’s financial independence – which of course is beneficial to everyone.

I don’t know if the Baton investment app is right for you or not, but check it out.  It may be.  At the very least, I hope sharing this part of my story may help start the conversation. Help you ask the right questions. Not accept conventional mediocrity.  Get more involved.

At the very least, I would encourage you to:

1. Set a realistic retirement goal;
2. Check your annual, five-year & ten-year returns; and
3. Check your holdings to make sure you know what you are invested in and not over-diversified

So look into it. And let them laugh. I’m laughing too, now. Albeit for a far different reason.

PS: I received a lot of great comments and questions after last week’s blog.  We’ll address those soon. Next up: “Finding the money to invest.” 
Patty McDonough Kennedy is CEO of Kennedy Spencer (www.kennedyspencer.net) a marketing communication agency, and Human Works (www.humanworks.guru), a communication training company. She works with companies and individuals across the world to develop effective marketing, communication and speaking programs that measurably improve communication, raise awareness and increase sales. In her blog ((Laugh Lines)) she writes about business, parenting, life & money.   

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