How to Avoid Trampling Your Retirement Savings


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Emotions are one of the most common causes for stupid financial decisions. Science tells us that the pain of losing is twice as strong as the joy of winning—so that means we’re much more affected by losing a 20 dollar bill than by finding a 20 dollar bill. Wrap your head around that. This concept absolutely affects your investments and the way you think about growing wealth.

Let’s talk about how the fear of losing money ties into Paradigm Life’s consistent recommendation to structure your core financial strategy outside of Wall Street.

We’re emotionally tied to money.

This is a no-brainer, but apply it to your entire financial strategy and it gets even more scary. Unless we understand this connection, long term savings can be fleeting. Because most of us believe at our core that money brings status, acceptance, comfort, and power, when that money (or perceived money) is threatened, we act irrationally to preserve it–even at the expense of unrealized potential gains.

Your emotions are an elephant:

In their book, Switch: How to Change Things When Change is Hard, Dan and Chip Heath compare decision making to a tiny rider on a massive elephant. The rider may think he or she is in charge, but what happens when the beast gets spooked? The elephant’s way always wins. It will do whatever it can to stay safe in the moment—that elephant is your emotional tie to money. When the market is calm, we think the rational side will be able to control the emotional side, but that’s not the case. Somehow, we have to find the balance between the rational rider and the emotional elephant.

People are sheep.

Though fear is an incredibly personal experience, it’s also quite contagious. Chances are if something goes awry with a sector in the market and people start jumping ship, you will go with the crowd. Your adrenaline will kick in and unconsciously you’ll feel that if all of these people are sensing the “danger” of loss, you should be sensing it too. Let’s say you see (oh I don’t know) the value of your house dropping through the floor. Unless you have the incredible self-discipline to override this instinct, or you are absolutely in it for the long haul, you’ll want out before it gets worse.

The market is volatile.

Hardwired herd mentality and mass decision making is a very important factor for why the market is a volatile place to grow money. Take Adam for example, he’s a herd investor and hears that internet stocks are the best investments right now. He will free up his investment capital and dump it into internet stocks. If biotech stocks become all the rage 6 months later, he’ll probably move his money again, probably even before he’s seen any significant appreciation in internet stocks. Among all the other factors that make the market volatile, do you really want Adam making decisions that affect your retirement savings or 401(k)? But keeping cash under your mattress isn’t the best way to build a retirement fund.

So what do we consistently recommend for financial, growth, liquidity, and legacy?

The Perpetual Wealth Strategy

We’re not dissuading you from investing in the market. But don’t do it without a sound strategy and don’t do it with your emergency money or retirement savings. You need a more stable environment that offers predictability, liquidity, and control as a vehicle. That means building wealth outside of Wall Street. To achieve this goal, we recommend the Perpetual Wealth Strategy.

One of the oldest and most reliable ways to grow and access your money is through permanent life insurance. Beyond any death benefit your family receives, when you structure your policy the right way it is an amazing, reliable vehicle to grow wealth. Let’s put it this way, in over a hundred years, mutual insurance companies (owned by policy holders) have ALWAYS paid a yearly dividend. That track record alone is enough to calm investment fears, but using this strategy has even more benefits. You can access your money by borrowing from your cash value—without losing dividends on the full amount. It’s an infinitely better strategy than Wall Street for security. Then go ahead with confidence and use your expendable cash to play the market.

Allow us to share more free education about how you can build that wealth outside of Wall Street with certainty, liquidity, and control. We want to give you more details about the Perpetual Wealth Strategy and how it can help you get started in panic-free investment decisions. We invite you to take 2 minutes to sign up for a FREE, extensive eCourse called Infinite 101®. You’ll receive access to video tutorials, articles, and podcasts. It literally costs you nothing to become educated on this ideal financial strategy and start changing your wealth paradigm!

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