Blog: James Studinger

James Studinger is the owner of the JPStudinger Group, a wealth-management company. James was an instrumental advisor on Michigan's new 529 College Savings Plan and is the author of Wealth Is a Choice. James will be writing about building wealth through and outside business in Michigan's tough economy.

James Studinger - Post 2: Appreciation

Yesterday we discussed being part of the solution and standing out in Michigan’s tough economy; putting pen to paper to test our ideas, relearn our jobs, welcoming peer feedback and establishing goals. And we talked about having strong anchor points to more effectively measure the quality of our decisions. 

Buy Appreciating Stuff Often (BASO)

Yes it’s that simple; buy things that go up in value. OK genius, I thought I was doing that in my 401k and at the moment, I certainly don’t feel rich! I hear you, so let me explain.

Michigan retirees have a pension and social security as the engine and chassis, with modest savings in the bank as traction control. For many auto related workers, their retirement strategy was to work with one employer for most of their career, have very low fixed expenses, own things free and clear, while living well within their means. There wasn’t discussion of investing 20% to 30% of earned income. We learned about money in that environment, and have become accustomed to the notion that our income is necessary to keep up with our spending. We would work therefore, to pay bills.

In this new society of individual wealth, scrap the idea that you work just to survive. You work in order to become wealthier, and much more independent. I don’t want my income to keep me afloat; I want my income to make me richer! Beyond money, one thing that hasn’t changed is that our jobs also provide us a purpose and life fulfillment.

It’s ironic, many acknowledge that the tides have shifted, and that we all need to be much wealthier than we are today, and yet we give most of our money to what destroys the sanctity of our future. We spend the majority of our income on bills, depreciating assets and activities which further increase expenses. And we give too little of our resources to assets that have the ability to make us more income. Is it any wonder that we don’t feel more secure?

You’re not going to get it right all the time and sometimes your values will decline. You’ll invest into some bad ideas. You’ll invest at the inopportune time. But through each experience, if you pay attention to what you are doing, and establish your strong anchor point, you’ll get good at this. You’ll realize that it’s not always easy to identify the best investment, but that it is very easy to identify the worst ones, like depreciating assets.

Keep in mind that investments are sometimes volatile, and as we are witnessing today, their value can change rapidly. You should also keep in mind that pension funds also move in value. And although you can’t usually see it, each day the pension fund is a little more or a little less solvent than it was yesterday. In the world of individual wealth we have great transparency and can see the value of our assets gyrate. That transparency can help you make sharp decisions, but it can also bring you anxiety. Keep going back to your goals and your anchor point to stay grounded, and smiling.

Tomorrow I’ll talk specifically about building wealth in business and how to build wealth outside your business.