There is never a "perfect" time

I once had a spiritual advisor who told me to "stop thinking; that I was no good at it". Obviously, you would need to know the context which that was stated, but it was an appropriate comment. Basically, this statement applies to most people.

Most individuals get themselves into a quandry by overthinking. They often suffer from "paralysis from analysis". What this means is they think themselves out of taking action. The mind runs and instills fear in the person. This is the mind's defense against uncertainty. Any conclusion it draws is negative, thus implenting fear into the equation.

Success is a result of action. There is no success without action. If you study the most successful people in the world, you quickly understand that they take action which moves them consistently towards their goals. Fear, while present, is not a determining factor. People move forward in spite of the fear.

Does this mean that one should recklessly jump at any opportunity that comes along? No. That is not being smart. Rather, it is foolhardy. The intelligent do their research, get the facts, make a decision, then act. This is far different from just plunging in head first.

Warren Buffet is considered the best stock picker in the world. He is the richest man with a net worth over $45 billion. He uses the above approach when looking at a stock transaction. All the research is completed when he enters the trade. Of course, he is buying billions of dollars worth of stock at one time. The fear of loss might be present, but it does not prevent him from moving forward.

There is a time to think and there is a time to act. Most people do more thinking than acting (I am not referring to being on a stage). They suffer from paralysis by analysis. Overthinking causes them to miss golden opportunities right in front of them. They are too busy waiting for the perfect time. There never is a perfect time. Take action and make the necessary adjustments as you progress. That is how the successful operate.

The world is full of risk. There is nothing in life that is totally risk free. Even the most basic of activities has the risk of catastrophe. Taking a bath as an example. For most this is a risk free activity. Yet each year thousands of people die in their own bathtub. In reality, just getting out of bed involves risk. You can never avoid it completely.

Do not omit planning and research from your success process. However, understand there is a point in time when action is necessary. Resist the temptation to succumb to fear by thinking some more. Move forward and adjust as necessary.

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Taking Money Out Of The 401K

Both McCain and Obama suggested allowing people to remove money from their 401K without penalty for the next couple years. The idea is to help people meet their short-term obligations. Sadly, this is the identical mindset that created the financial crisis to begin with. It is the product of short-term thinking. The long-term never enters the thought process.

Taking money out of one's 401K is the dumbest thing you can do. I know this since I did it a number of years ago. This cost me substantially over the last few years. Here is the scenario.

I had the opportunity to invest in a property. I hit up my 401K to finance part of the acquisition. This enabled me to get the property upon which I was going to build my real estate empire. Of course, an interesting occurrence called the collapse in the housing market altered those plans. I ended up losing the house.

Let's look at what I did to myself. The money in my 401K was put there tax free. It was pre-tax dollars. After I took it out, since it was a loan to myself, I repaid it with after-tax dollars. When I reach the age of 59 1/2 (or whenever I take it out), I will be taxed on it again. Thus, I pay tax twice on the same money.

Another thing occurred during that time period; the stock market shot up. The money that remained in my fund realized an average 24% annual return for a number of years. I missed this opportunity with the greater portion of my funds since they were removed. Therefore, my opporunity cost was substantial.

This example should show why the proposal of the candidates is stupid. However, there is one other point I want to make. People who take the money out of their 401K to meet short-term needs might alleviate the problem today. However, the odds are they will be in the same situation in the future. Also, when they finally do reach retirement age, I would guess the money will not be replaced. They will need a "bailout" at that time.

Remember this the next time you hear someone suggesting taking money from your retirement fund. It is a dumb move and I have the scars to prove it. Learn from my mistake.
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