What I’ve Learned So Far- Chapter 2

By Ted Schwartz, CFP®

Well, after 25 years in the investment biz, I thought I would try to distill some of what I have learned so far (for myself and for you). Some has been learned the hard way through trial and error and some has been learned from the help of others without too much pain and suffering on my part. At any rate, I would like to offer some of what I now believe in a series of blogs that will hopefully be of some value to you.

Chapter 2- As advisors, our investment advice will not make you rich

Many great businesses have meaningless names, allowing them to paint their meaning on the names, like a blank slate. Microsoft and Google are greats examples of this trend. When you hear these names for the first time, you have absolutely no mental picture of the company or what it does. These great companies have transformed these meaningless words into ones that are universally recognized and on which we all now have many mental associations.

I did not have a similar idea in mind when I named Capstone over 20 years ago. I wanted the name to speak to what we were in relationship to our clients. I chose the name Capstone (i.e. a stone at the top of a wall) to connote that we were a service of importance to our clients but that we were not truly foundational to their lives. It was up to clients to decide their path (their passions and goals) and our place to help them formulate a financial plan to meet these aspirations. We provide an important support role to our clients’ hard work and efforts.

After all these years I think the name still stands up well to the test of time. It’s meaning has changed a bit in my mind over the years, but still is a good fit for our mission.

Over these years, more than one prospect has expressed to me their hope that we would “make them rich”. I understand now, more than ever, that this hope is not really related to the core of what we do. It is our client’s hard work and habit of saving that is at the foundation of their good fortune. Our job is to attempt to make your hard-earned savings grow at a rate above inflation and within your comfort zone, so that your savings compound over the long haul and fund your life goals. We try to accomplish that with as much safety as we can, taking on risk reluctantly on your behalf, but knowing that keeping up with inflation and having positive growth beyond the rate of inflation can only be accomplished with some amount of risk to your principal.

It is certainly possible to get rich on investments. I know some people who have had the good fortune to accumulate most of their money by the investment choices they have made. If you had put your life savings into Walmart, Amazon, Microsoft, Starbucks, Apple, or Bitcoin when they first began trading, you would likely have become rich as a result of these decisions. However, had you done the same with many, many other young companies with great prospects you would have nothing left from your life savings. It is, plain and simple, not a prudent decision to risk your life saving on a series of very risky investments. You can choose to do so if you like, but….it is not what we at Capstone do. We try to help you take your savings and reshape them into a stream of income that can last for your lifetime and beyond. We are not speculators; we are investors of savings.

In baseball terms, we want to be singles hitters. Home run hitters tend to also strike out a lot and we do not want to strike out with your life savings.  We call ourselves Capstone and wish to be a crowning part of the solid life that you have built, maintaining a long-term relationship with you geared to help you restyle the rest of your life.