Since this is the diamond anniversary of my relationship with baldness, I believe it is time to reflect on the experience. What have I learned from being bald? Are there any hidden gems of wisdom to be discovered, polished and shared? I believe there are a few.

Me with hair... a lot of it

First, let me provide some history that lead to what I call ‘The Zen of Baldness’. As a kid, I had a full head white hair. During college, my hair grew down to my shoulders. I was cool and unstoppable. Then a funny thing began to occur in my early 20s. I noticed my scalp would get sun burned. Interesting, I thought God gave me hair to protect against that. However, upon closer examination, I came to the terrifying conclusion that I was losing my hair. Denial took over.

I tried several new-fangled hair care products, stood on my head, and rocked some really cool short haircuts (emphasis added). At one point, I had platinum hair (It’s okay to laugh). None of these tricks hid the reality that I was going bald. I knew it, my wife knew it and my friends got a kick out of watching me try to avoid the inevitable.

One faithful 100-plus degree Austin, Texas afternoon while working for Centex attempting to sell lawn care, one of my co-workers named Lance (funny enough) came in the door of the boiler room with a six pack of beer and clippers. The time had arrived.

As I took a sip of that ice cold brew, I heard the snap of the clippers and proceeded to watch my hair fall like rain into my lap. The rest is history.

Zen of Baldness Wisdom: What did I learn?

• Some things cannot be changed. Therefore, we must change or adapt. I am bald. Nothing can change that fact.
• Some things can and should be changed. Therefore, we must do everything in our power to change those things. I am bald. I can either complain about something out of my control or embrace it’s uniqueness (and convenience).
• Some things should NOT be changed. Therefore, just because we can, does not mean we should. I am bald. I should not pump a bunch of dangerous medications and hormones into my body in the attempt to grow hair.

Knowing how to discern between these 3 has brought me peace.

Wikipedia defines ‘Thunder as the sound made by lightning. The sudden increase in pressure and temperature from lightning produces rapid expansion of the air surrounding and within a bolt of lightning. In turn, this expansion of air creates a sonic shock wave which produces the sound of thunder, often referred to as a clap, crack, or peal of thunder.’

Earlier this week I was awakened from my slumber by a massive storm rolling through North Texas. A flash of white light flooded the room for a nanosecond. It blinded me for a few moments. Then, I could hear thunder being born in the distance, that crackling sound somewhere in the atmosphere. I could perceive the general direction of its origin but I could not pinpoint the exact place where the sound was created. After its emergence, its echo faded into silence. Then, a distant rumble made its way toward our location. As it approached, it grew louder. The reverberations caused by the low frequency shook the earth. The force compressed the air and my entire home was engulfed by a shock wave which vibrated everything in its path. It was if a giant locomotive was rushing through our home. It was at this moment that I truly appreciate the magnificence and power of thunder.

Thunder is unique, effective and gives lightening a voice. The combination of the thunder and lightning is creative genius. Thunder has the power to stop everything for a moment. It provokes silent awe and makes us feel small. Thunder does not discriminate. It will shake the earth and everyone and everything in the area. Thunder has the power to impact us and we become aware of something bigger than ourselves, something sovereign and powerful.

I am convinced that there are people quietly creating thunder in our world. Their lives, their message, and their passion make us stop, take notice and point to something bigger than ourselves. The thunder they create reflects the brilliance, power and purity of the real thunder we experience during a storm.

Perhaps it is a noble endeavor to create some thunder in our culture that shakes the world out of its slumber.

Job 36:27 – Job 37:1-12
Psalm 29:3-9

We booked direct flights into San Jose. Then, we booked a one night’s stay at a hotel near the airport because we had to catch an early morning flight to Manuel Antonio. After several weeks of research, we found the perfect place to stay. Our private villa was perched in the trees on a hillside offering 180 degree views of a protected cove overlooking the azure waters of the Pacific Ocean in a small community called Tulemar. Our villa had a full kitchen, maid service, gas grill, shuttle transport and a private beach outfitted with kayaks, boogie boards, comfortable lounge chairs and a friendly wait staff.  One day, as I watched clouds drift by and the golden sun sink into the calm sea, I took a sip of my Pina Colada and reflected on the amount of effort and planning it took to park our butts on this beautiful patch of sand.

It took a tremendous amount of effort and planning to achieve these results within a modest budget. Planning and saving began nearly a year in advance. Kathryn and I denied ourselves many dinners out and other luxuries in order to invest in an awesome experience in Costa Rica. Everything from our children being cared for back at home to our transportation to and from the various airports had to be planned and timed perfectly in order to give us maximum beach-time. Since we had to take a smaller aircraft to our final destination, we were limited to how much we could pack and the weight of our bags. We had to make sure we did not run out of money, cloths, etc, while on vacation. We made sure our debit cards and cell phones would function properly. We left very little to chance on this 6-day dream.

What does this have to do with Retirement, you ask? Everything!

Our vacation lasted 6 days. What if our Vacation (with a big ‘V’) was going to last 20 years? How much planning would be necessary to take a 20 year Vacation?

Actuarial tables state that when you turn 65 years old, you will probably live another 21 years (86 years old). If you plan on retiring at 65, you are essentially going on a 21 year Vacation. Did you do your due diligence and plan properly? Did you enlist the help of an expert? Or did you randomly show up at the airport hoping that you could catch a flight somewhere nice?   Hopefully there would be a place to stay and hopefully you would not run out of money.

The sad truth is most people will spend more time planning for a 6-day vacation than their own retirement.

What about you?

• Have you ever wondered why your day spirals out of control?
• Have you disconnected God from your work?
• Do you ask yourself “Where is God at 3 O’clock in the afternoon”?
• Do you go to bed wondering why God seems so far away?

God wants our best. His grace provides for our fallen humanity (sin) but, He wants our first fruits. It is about giving our best to Him in order to receive His best every day. Just like you, I fall short of God’s perfect will. We should start off the day acknowledging our imperfection and dealing with it via God’s grace, so that we can swing for the fences. Do you know people who are constantly in a state of crisis? Are you one of these people? I was for most of my life. Would you like to bring peace to your every day existence? Jesus calmed the storm for his disciples on the Sea of Galilee. He can do the same for you, if you let him.

A few years ago, I decided to wake up 30 minutes before my usual time to pray and read my Bible. I did not have a guide; I just jumped in by praying and picking a section of the Bible at random. Over time, I have researched and experimented with several Daily Devotionals and Quiet Time plans. I found that there is no ‘one-size-fits-all’ strategy out there. God created each of us as unique beings. Therefore, what works for me, may not work for you. However, it is a noble endeavor to begin our day in communion with God before the day begins. Below are 5 steps that can help you establish meaningful and effective devotional time. We live in God’s presence.

He is never distant. It is our awareness of His presence that needs to be cultivated.

1. Wake up early, make some coffee. Find a Quiet and Comfortable place.
2. Use the ACTS prayer model
3. Spend time focusing on Christ’s atoning sacrifice by contemplating the Cross and searching “the mystery of His wounds (C. Spurgeon)” (Resource: Humility: True Greatness – Mahaney)
4. Read Your Bible and Ask God to show you how to apply it to your life (Life Application Study Bible)
5. Keep a daily prayer journal. You can refer to it in the future to see how God answers ALL prayers.

For an added layer of awareness visualize yourself “Putting on the Full Armor of God” as you finish your devotional time. (Ephesians 6:10-18)

These are steps that work for me. I hope they work for you as well. You would not attempt to drive your car to work with an empty tank. Why would you start off your day without acknowledging and praising the one who created you and gave His life so that you may live?

What does your daily prayer time or devotional look like?

Play Video Below or Click on WMV Link below post.
2 Stages of Financial Life – Host: Lance Cashion 11.17.11
WMV Link: 2 Stages of Financial Life – Host: Lance Cashion 11.17.11

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

*Investment Advisory Services offered through Global Financial Private Capital, LLC, an SEC Registered Investment Advisor

**Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Insurance and Annuity product guarantees are subject to the claims-paying ability of the issuing company, and are not offered by Global Financial Private Capital.

What happened?
The S&P 500 is the industry benchmark for performance for the majority of portfolio managers. In fact, most active large-cap fund managers try to beat the S&P 500. Sadly, over the last 3 years 64% of those managers have underperformed the benchmark.

In 2008, the S&P 500 lost over 13%. This means that if your accounts value was $1,000,000 at the beginning of 2008, it was worth $870,000 by the end of the year.

In 2009, the S&P 500 lost approximately 26%. This means that your $870,000 account would now be worth a whopping $640,380 at the close of 2009.

We’re not done yet. Let’s say that the actual expense ratio of your entire portfolio is 2.5% (this includes advisory fees, admin fees, 12b-1 fees, other expenses and hidden fees). If your original account value was $1 Million dollars, you paid $25,000 to lose $130,000 in 2008. Fees magnify losses. Therefore, you actually lost $155,000. In 2009, the 26% loss plus the 2.5% in fees left you with $610,000! You paid $46,000 to lose $390,000 in two years. If your portfolio manager was one of the 64% who underperformed the S&P 500 benchmark, it is worse.

Now, imagine being 65 years old in 2008 or 2009. How many years did you work and save to accumulate the $390,000 that you lost in two years? It would take a 390% gain in the market to get back to $1,000,000.

What can we learn?
1. We don’t have a crystal ball and we cannot predict the future.
2. We CAN use the information we have to plan for the future.
3. We understand that markets and poor performance coupled with fees can have drastic ramifications on our retirement.

What can we do about it?
1. Plan for your future income needs and know your numbers.
2. Insulate yourself and your retirement from unnecessary risk, hidden fees and poor performance.
3. Create a guaranteed stream of income by insuring a portion of your retirement savings.

It’s time to take control of your retirement.

Source Information: Standard & Poor’s Indices Versus Active (SPIVA) & Standard & Poor’s SPIVA U.S. Scorecard (link)

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

For over a decade there has been a growing movement for more transparency on the part of the 401k industry particularly in regard to fees and expenses. While plans disclose some fees and sales charges, etc., other fees exist in a murky world of non-disclosure.

How much does it cost to own your retirement portfolio?
This is an important question that needs answering. The money you have worked for and saved should be earning compounded interest in your retirement accounts. However, much of that money is being drained by fees and charges. This puts your retirement in jeopardy because high fees reduce gains and intensify losses.

Example:
If you are approaching retirement have an account value of $1 Million dollars and paying 3.3% in fees, the annual cost of owning your portfolio is $33,000 regardless if you make or lose money.

• In 2008, the average 401K balance for Baby Boomers was less than $60,000.00 (Source: Bloomberg).
• A 2010 AARP survey showed that 71% of account holders did not believe they paid any fees at all (Source: AARP)

Those are frightening numbers. The Department of Labor has set out change this.

Two Things You Need to Know:

Participants (Employees): Fee Disclosures
401k-type plans will be required to disclose fees, sales charges and other expenses. By the end of May plan participants should receive documentation from plan providers explaining fees, expenses, returns and other important information. It is important that you read and understand this information. See the links at the end of this post for more info

Sponsors (Employers): Fiduciary Responsibilities & Liabilities
Sponsors of 401k-type plans have a personal and corporate fiduciary responsibility to provide plan information, guidance, investment options, reporting, ensure that service fees are reasonable and provide disclosures. If a plan sponsor fails in his/her fiduciary duty, they could be fined by the Department of Labor and could be sued by plan participants. See the links at the end of this post for more info.

Takeaway: What does this mean for me?
If you participate in your employer’s plan, take the time to read the disclosures and ask questions. Make sure you understand your options, risks and fees involved in those options. Put forth the effort to ensure you are in suitable funds. After all, it’s your financial future at stake.

If you are a plan sponsor, make sure you fully understand your fiduciary responsibilities and liabilities. You can choose a provider to act as an ERISA 3(38) advisor for the plan. This will reduce your fiduciary burden and liability, allowing you to focus on running and growing your business.

We must educate ourselves and make good financial decisions, period.

Suggested Reading:
Six Things Your 401(k) Doesn’t Want You to Know – Forbes
A Look at 401(k) Plan Fees – Department of Labor
Revealing Hidden Costs of Your 401(k) – NYT
Participant-Directed Investments Under Individual Account (401(k)) Plans and New DOL Disclosure Requirements – Laythem & Watkins
What Retirement Plan Sponsors Need To Do About The New Fee Disclosure Regulations – Rosenbaum Law Firm

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

“In human decision-making, losses loom larger than gains.”
- Kahneman & Tversky (Prospect Theory)

In economics and decision theory, loss aversion refers to people’s tendency to strongly prefer avoiding losses to acquiring gains. Some studies suggest that losses are twice as powerful, psychologically, as gains. (Wikipedia).

Simply put, losses have the same psychological effect as pain and have twice the impact of gain (pleasure). Our brains are wired to avoid pain. This affects the decision making process without our being conscious of it. The ramifications can be devastating. It leads to risky behavior.

The loss averse person attempts to avoid loss at all costs. But what are those costs?

Jonah Lehrer points out: “Loss aversion (also) explains one of the most common investing mistakes: investors evaluating their stock portfolio are most likely to sell stocks that have increased in value. Unfortunately, this means that they end up holding on to their depreciating stocks. Over the long term, this strategy is exceedingly foolish, since it ultimately leads to a portfolio composed entirely of shares that are losing money… Why do investors do this? Because they are afraid to take a loss⎯it feels bad⎯and selling shares that have decreased in value makes the loss tangible. We try to postpone the pain for as long as possible. The end result is more losses.”

This translates in to how we frame and rationalize investment and savings instruments.

A loss averse person may choose a bank CD over investing in the capital markets because they don’t want to lose money in the markets. However, in the current low interest rate environment coupled with rising inflation, they are actually losing purchasing power. So, the CD is not as ‘safe’ from loss as they thought. (I won’t get into the tax implications).

“Loss aversion would come into play when considering the purchase of certain types of annuities such as a single premium immediate annuity that involve a single premium payment rather than a series of premium payments over time. In other words, a situation where a person might—to use a highly simplified example—provide $500,000 to an insurance company in exchange for a $25,000 per year annuity payment that lasts for the rest of his or her life. The person might frame the $500,000 annuity premium as a potential investment loss rather than seeing it for what it is—a conversion of assets into a guaranteed stream of payments that supports consumption during retirement.” (Tom Cochran)

In conclusion, loss aversion can lead to actual loss. We must be conscious of our decisions and their ramifications. Most of us can agree that taking unnecessary risk is NOT a good choice. But, driving our car off of the road to avoid a pot-hole because it may damage our car is a bit risky, don’t you think?

Credits: Article references credited to: Jonah Lerher-The Frontal Cortex-Loss Aversion (Feb. 10,2010) and Tom Cochran-Harvard Professor Roland Fryer – The Annuity Puzzle and Why People are More Comfortable Flying if They Can See the Cockpit (March 11, 2009)

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Let’s think about it. If your living expenses are $42,000 per year and you want to retire at age 65, you’ll need $756,000 to support you to age 83. This does not take into consideration inflation, taxes, etc. The Consumer Price Index (CPI) as of July 2011 was 3.6%. This means that you’ll need a lot more than $42,000 in annual income. Every year we lose purchasing power.

What if you live to 85 or 90 years old? What if you need long term health care? What if you want to help fund education for your grand-children or plan travel during retirement?

If living expenses are $42,000 per year, your retirement accounts need to be kicking out more than $60,000 per year a decade from now.  Plus, you want to ensure that you don’t outlive your income.

I believe that Long term care is the single biggest threat to your retirement accounts. The Department of Health and Human Services states that 70% of people over 65 will require long-term care during their lives. Nursing home averages $70,000-$77,000 per year. Do you want to gamble on those odds?

In order to protect our retirement income:

• You need to address the threat of long-term care. There are several ways to deal with this threat. If your advisor has not helped you create a plan to neutralize the threat, it’s time to get a new advisor.
• You need to address the threats of inflation and taxes. Inflation protection can be calculated and taxes can be minimized.
• You need to address outliving your income.  This is achieved by insuring a guaranteed income.

At the end of the day, it may be time to speak with an income specialist. You worked to build your retirement accounts; there is no room for error. The quality of your retirement depends on your willingness to protect your income.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

On January 5, 2011 I wrote out my 3 year goals. One of those goals was to go on a mission. I have never been on a mission.  My focus verse for 2011 is; “Be devoted to one another in love. Honor one another above yourselves. Never be lacking in zeal, but keep your spiritual fervor, serving the Lord.” (Romans 12:10-11). When I first saw the devastation from the tornado on TV, I felt a tug on my heart. Those poor people was all I could think. What if it was my family? A few weeks later, our church announced that they would be sending teams to Joplin to help with relief efforts. This time I felt compelled to act. I remember saying to myself, “I must go to Joplin”. Normally, we would send a check to help in relief aid.  However, God had other plans.  I mentioned this to my wife and she looked at me and said she was not surprised at all. Then she followed with encouragement to act. Frankly, I was surprised by her not being surprised!

I took a step in Faith and went through the process of joining the team headed to Joplin. God was going to use me; a not-so-handy guy to serve in Joplin. My goal was being realized right in front of my eyes. Romans 12:10-11 was manifesting itself in Joplin. 15 years ago, if you would have told me I would be on a mission trip with a team from my church, I would have laughed in disbelief.

When we reached Joplin, we had entered God’s classroom. This is where the world of man and the world of God meet.  It was an amazing experience.  I’ll let the photos tell the story and then I’ll tell you the 5 Lessons I learned in Joplin (click on image to zoom / Photos taken with iphone)

The neighborhood we were assigned to

A home was completely gutted by the tornado.

Cloths still hung in the closet and books undisturbed on their shelves

The image speaks for itself.

Looking into a destroyed kitchen where meals were cooked and family gathered

Joplin High School

Joplin High School took a direct hit. Releif workers constructed Eagles (mascot) out of downed trees. Someone had added the letters 'H' and 'E' to the sign. Giving it a new name 'Hope High School'.

A wall of images collected at one of the relief centers. A haunting reminder of how life can change at any moment.

The Team and the house I refer to as 'our house'

5 Lessons from Joplin
1. Trust. I remembered to trust God when he calls. I let go of the reigns and allowed God to put me where He could use me.
2. Faith. I took a step in Faith and God showed up.
3. Humility. I was humbled by being in the presence of people who had lost everything but managed to smile and go on with life.  They persevered!
4. Perspective. My world changed once I entered a reality where temporal things had been destroyed and all that was left were people who were hurting, left clinging to their faith and each other.
5. Gratitude. I was thankful for my family and the privilege of serving in Joplin.

Thank you to the people of Joplin for the hospitality and lesson that I will carry forever.  I thank God for the privilege to serve with an awesome team.

No matter who you are, God can use you!  Take that step in faith and see what happens.  Then, tell us about it.