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How a 1st Grade Math Lesson Can Help Us Become Better Behaved Investors

John Venn was an English mathematician.  He was an avid gardener and won an award for his roses in July 1885 and his white carrots later that September.  He’s more well-known for the work he did in 1886 though, when he introduced what we know as the Venn Diagram.  The diagram, as you remember from elementary school, shows the logical relationship between two sets.

In first grade when I was introduced to the Venn Diagram, I did my report with NCAA basketball rules in the left circle and NBA basketball rules in the right circle.  Basketball at both levels has certain similarities but there are obviously differences in the rule book.  “Traveling” is in Rule 4 under “definitions” in the NCAA rule book.  I don’t know what page you’ll find the “traveling” violation in the NBA rulebook as an example.

I’m done playing basketball, but I still have a favorite Venn Diagram that I apply to many areas of my life.  I’m not sure where the credit is due (it’s certainly not my idea), but I now like to apply the following Venn Diagram:

It works wonders raising a teenage girl and two young boys.  It works (sometimes) in my relationship with my wife.  It has worked well to help me make decisions to navigate a global pandemic.  I think it can also help us navigate the investment world.  

When we talk about financial planning, investments, and money there are many things that matter.  There are many things that we can control.  There are very few that are both. 

My personal savings rate certainly matters.  It’s also under my control.  I can control the diversification of my investment portfolio.  It also matters.  The level of debt that I carry with me into retirement matters.  I get to control how much debt I have.  Who wins an election, where inflation is headed, what the S&P does over a short-time horizon or how much Harley Davidson profits on a motorcycle might feel like they matter and maybe some of them do, but I certainly can’t control any of those variables.

Hefren-Tillotson’s MASTERPLAN® has been and will continue to be a very successful tool to help people plan, prepare, and execute the financial side of their life.   The MASTERPLAN® focuses on the things that fit in that section of the diagram where things that matter meet with things that we can mostly control.  Stay in that space in regards to your finances and maybe use it in other areas of your life as well.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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