• 401ks,  Adams Financial Concepts,  Financial Planning,  Return on Investment

    Why Do Financial Plans Fail?

    You have likely heard of Financial Planning, and you may even be using it yourself for retirement planning, building net worth, providing for education, etc. Although it has become a very popular way to design portfolios, I believe that traditional Financial Planning has five specific fatal flaws: Plans do not adequately provide a margin of safety for black swan events. Plans use averages which work well during normal times but are not geared to deliver a margin of safety for times like the Great Recession of 2007-2009 or the high inflation times of the 1970s. Plans use probability models which are not reflective of actual market probability. Probabilities are calculated…

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    Why Do Financial Plans Fail?

    You have likely heard of Financial Planning, and you may even be using it yourself to prepare for retirement. Although it has become a very popular way to create portfolios, I have come to believe that traditional Financial Planning has four specific flaws that may be fatal. Since realizing how risky Financial Planning was, I have begun creating portfolios which have a higher return and create a margin of safety (or a substantial windfall of extra savings above and beyond what is nominally necessary for comfortable retirement) to mitigate what I believe are significant risks as the market changes with new technology and industries. Our view is that traditional Financial…