The best investment of your lifetime may not be something that trades on an exchange, can be purchased privately, or sit in a safe deposit box. For some people, the very best investment can be something they quite literally have never considered before, or even knew existed. And this thing is likely different for a great many people. This thing is called the Ignored Issue. It is the thing, or in some cases, the multiple things that you have not focused on or even were aware that you should be looking at it.
The list of ignored issues is long, so for this discussion, we will review just a few of them, starting with the most obvious and moving on to the nuanced. The easy and obvious one is life insurance. If you are the breadwinner and you have a family and you do not have life insurance you are likely missing the best investment of not only your life, but your spouses and children’s life. If you are unlucky and die prematurely with life insurance, your family is set. If you don’t have it, your family is likely shattered. Most people would agree that this is an incredible investment and the best thing you can do. However, according to the LIMRA, the 100-year-old Life Insurance trade and research association, over 30% of American families do not have it. For one example, for $50 per month, your family can be covered for a significant period of time in case of the untimely death of the head of household. Its hard to argue against this investment.
For a different group of investors, college graduates and those newly in the workforce, they may be unwittingly losing thousands of dollars a year. In the scenario of paying 18% interest on $20,000 of credit card and contributing to their 401k where the market returns have been at best 10% historically, its easy math to see you are losing 8% per year. Even when you factor in a company match, often you are losing money. By simply stopping your 401k and instead paying down that expensive debt off your books, you can be far better off. Everyone’s situation is different, but if you’ve never considered this, its an easy way to stop losing money, which in essence is an investment.
A more nuanced opportunity is couples not comparing 401ks. There are many couples who have never even discussed the risks that may lurk in their 401k. Both could be overweighed in technology for example, or have too little equity exposure. The question of should your retirement plans be coordinated or uncorrelated is a big question that can impact your retirement plan as a couple. This complicated and nuanced examination is much easier to have when guided by a financial advisor, but if you have not even looked at the issue, it could be a found opportunity.
Being aware that you don’t know what you don’t know could very well be your greatest act of financial self-improvement. The first step is to recognize that there are likely issues you’ve never examined or thought of, and then find the resources to get educated on them.