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RALPH SACCO, SENIOR FINANCIAL CONSULTANT, IG WEALTH MANAGEMENT Sacco’s Seven Simple Strategies for Financial Stability

December 18, 2018

                                                                   RALPH SACCO

 

 

 

If you want to build a financially stable foundation, the simplest strategies are your best building blocks. That’s the advice Senior Consultant Ralph Sacco wants everyone to take when they start investing.

 

“Follow the simple rules that no one talks about anymore,” Ralph says. “The simple rules work in the long term. That’s what I’ve learned with clients over the past thirty years of helping them achieve their goals.”

 

The married father of two adult children knows exactly what challenges  clients are facing, regardless of what phase of life they are in. He’s been there himself.

 

“I’ve been married for 27 years,” Ralph says. “Marriage is a bit like the market. It goes up, it goes down, and there are times that are comfortable and easy. Everything I do is long term.”

 

Investment portfolios, like good relationships, are also created over the long term. To do both, Ralph Sacco has developed a series of seven simple strategies.

 

 

1. Start with clarity

 

As a culture, all of us have a difficult time talking about money. It’s considered most polite to just not mention money at all. As a result, a lot of us have issues articulating exactly what they hope to accomplish with the resources we have available.

 

“Clarity is the most important outcome of my first meetings with new clients,” Ralph says. “We  have to be very clear about the goals they want to achieve and that is easier said than done. Whether it’s to save for a down payment on a house, or to start a business, or to purchase an income property – within a certain time frame -- it’s only once the goals have been articulated with clarity that I can get a commitment from them. Seeing progress will help them stay committed to their plan and they’ll be consistent. It’s tough when you’re starting out to create good habits, but clarity of purpose helps everyone do just that.”

 

2. Follow the 10% rule

 

Put aside ten per cent of whatever you earn. Everybody and their grandparents know this rule, but with all the legitimate news and less legitimate noise about the stock markets and economic surrounding us, this elementary rule of financial success is the one most easily ignored.

 

“Ten per cent off the top is a simple tip and, as soon as you make it complicated, you diminish its power,” Ralph emphasizes. “After you get used to doing it, then if your expenses are not as high you can look at increasing that amount to achieve another goal or your primary goal more quickly. It’s the quickest way to build substantial capital and then you can take advantage of opportunities as they arise. The biggest challenge is to stay focused while making small changes that accumulate over time. The ten per cent rule is the best way to make that happen.”

 

3. Stay with the standards you set, invest according to your principles

 

If you’ve lost a beloved relative to lung cancer or alcoholism, you probably don’t want to invest in tobacco companies or distilleries. At the same time, if that same relative experienced relief from treatment side effects thank to cannabis products, investing in that industry in the new era of legalization might appeal. We all have our own feelings about oil and gas, solar and geo-thermal, technology and agriculture.

 

“I spend a lot of time talking to clients about what their principles are. If we do set a portfolio up, we have a certain set of standards in place that determines what we invest in and how. Those standards also determine when we buy and sell. It’s important to stick to those standards rather than jumping in and out of the markets or specific stocks. That’s speculating, not investing. If certain investments are doing better than others, there is still leeway to take advantage where there is more upward activity. When the Canadian market hasn’t performed well, we can take advantage of what is happening elsewhere according to the clients’ principles.”

 

4. Manage your emotions

 

Money can be an emotional topic, but it shouldn’t be. The standards and principles we set with a financial consultant help to minimize the influence and feelings by respecting our values.

 

“You have to be able to look at taxes, at living expenses and earnings with a clear head,” Ralph says, “but that doesn’t mean feelings don’t matter, just that they have to be managed. A lot of clients want to know what will happen if they can’t earn enough money in pre-retirement to make sure their income level isn’t lost or diminished. Every time you turn on the news, there are uneducated opinions causing worry and stress. Clients have told me they couldn’t express their frustrations when they talked to other advisers, but I ask a few key questions to get them thinking and that process itself is calming.”

 

What are the questions Ralph asks to help clients manage their emotions and think logically about investing?

 

Are you living above your means?

 

What is your budget for living expenses and for investing?

 

How did you get through the last bear market?

 

How did you respond to that time emotionally?

 

What are your fears about financing the future?

 

What do you consider a reasonable rate of return on investments?

 

Answering these questions by referencing real numbers and real life choices can put fear and worry into perspective and help to create reasonable plan for resolving anticipated problems before they occur.

 

5. Look at the realities of life right now

 

Different generations are facing very different economic realities.

 

“Sometimes, I do get parents or grandparents coming in with their kids or grand-kids who say, ‘please, take care of my child,’” Ralph says. “There is a substantial generation gap in how people approach savings, debt and investments. Every aspect of finance, actually.”

 

Much of that generation gap is based in a lack of familiarity with or understanding of each other’s realities. Different generations have faced very different employment markets and opportunities.

 

“Wages really haven’t risen with the cost-of-living,” Ralph says. “Life is so expensive that we’re seeing people live at home longer until they can afford to become independent. Some of the younger generation sees it as an impossible goal to achieve and their parents start to worry their kids are just lazy or unmotivated.”

 

Millennials aren’t the first generation to experience precarious work, low wages and employment instability, but their responses to those factors are quite different.

 

“Our parents’ generation were savers,” Ralph remembers. “They saved their money before they purchased anything and they thought debt was always a bad thing. My generation understands that, used properly, debt is a good thing as long as you buy appreciating assets. The younger generation, though, they are only worried about whether or not they can make the monthly payments. If something happens, if they can’t work for a period of time due to an illness or family problem, and they can’t make the payments, they don’t have a plan B.”

 

The creation of that Emergency Plan B is where Ralph’s careful caring approach is most appreciated.

 

“These are things we can put on paper and calculate clearly,” Ralph says. “You want to buy a rental property? Let’s calculate the debt to service ratio. If you had a major repair issue or your tenant stopped paying, what would happen if you didn’t have rental income for a period of time? Tough times will happen, that is part of life, but preparing for them now stops them from being disastrous later on.”

 

These difficult conversations are part of the journey for most investors at some point in their lives. Ralph has the professional and life experience to know that other stages of the investing adventure will have fewer rapids to navigate on the way to smoother sailing.

 

“What I find is that people in their 20s don’t need financial planners because they are all going to be multimillionaires,” Ralph says with a laugh. “In their 30s, they are all too busy getting married and starting families to really talk about investing, but they do know they need life insurance. In their 40s, people are starting to think about retirement. In their 50s they have a bit more income to start thinking about putting more away and in their 60s they want to turn their investment savings into retirement income. After that, they are enjoying their lives and we’re planning the easiest and most tax-efficient ways to transfer that wealth to the next generation.”

 

6. Make a holistic plan to manage wealth

 

The explosion of the internet, the omnipresence of business and finance media and the constant flow of stock tickers across all of our screens have immersed everyone in the language and processes of the markets.

 

“Everybody is an expert now,” Ralph says with a sigh. “There is bad commentary coming from all kinds of places that might summarize what happened in the markets over a single day, but is not applicable or helpful to a long-term investor with specific goals to achieve. When I started in this business, people met with their insurance representative, their banker, their broker and an investment advisor. Now, we’ve brought most of those services together and it’s more about sitting down and creating a big picture. Mostly, that relationship is with me, but through IG Wealth Management, we have a team of accounting, legal and other regional specialists to bring in when we need them. I also have an assistant and two associates to help manage clients’ needs.”

 

The result is a holistic plan to manage wealth over decades and through generations.

 

7. Use expertise to avoid opportunity costs

 

Life changes and puts different demands on our time and income as it changes.

 

More involvement and understanding of the market and investing can be positive for everyone. However, those who decide they can manage their portfolios themselves often fail to account for the opportunity costs of working in investment as a non-specialist. It’s a situation Ralph works with every day.

 

“We might create a speculation account for clients to try out self-managed trading and some of them are very good at it,” Ralph explains. “They make some money and they save commissions and management fees. What most of them come to realize after a few months is that the time they spend on trading is costing them time they could be spending on their core business or profession and they are actually earning less income overall.”

 

Using professionals to invest, like using any other professional service, let’s everyone concentrate on their talents and abilities to the highest degree. In investing terms, the result of bringing in a consultant is a holistic plan to manage wealth and preserve it through portfolio management and a plan to transfer wealth as time goes on. 

 

Ralph knows the joy of seeing people through those changes and preserving their wealth as they experience the rich pageant of life.

 

“I was able to help my neighbour save a lot on her taxes just by moving her portfolio around,” Ralph remembers. “She’s been able to earn a great rate of return by investing what she saved in taxes. She is in her 80s now and it is wonderful to see her continue to experience growth. She has been a client for 29 years.”

 

This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Ralph Sacco is solely responsible for its content. For more information on this topic or any other financial matter, please contact an Investors Group Consultant. Insurance products and services distributed through I.G. Insurance Services Inc. Insurance license sponsored by The Great-West Life Assurance Company

 

 

Kate Baggott's technology and business journalism has appeared in the Technology Review at MIT, the Globe and Mail,  Canada Computes, the Vancouver Sun, and on the Business to Business News Network.

 

 

 

 
 
RALPH SACCO
SENIOR CONSULTANT
INVESTORS GROUP FINANCIAL SERVICES INC.
 
210 Martindale Road, Suite 100
St. Catharines, ON L2S 0B2
905- 682-7292
877-857-7280
 
ralph.sacco@investorsgroup.com
 

 

 

 

 

 

 

 

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