Published: Nov. 19, 2014, 1:29 a.m.

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Working towards retirement can feel like rafting a river full of dangerous rapids. As you flow down the river of your life, your constantly having to navigate events that threaten to\\xa0turn your life upside down. Unemployment, death, divorce, college costs, healthcare, recessions, corrections, inflation and countless others can put you on the rocks. This week, I discuss how to "self rescue" if the rapids of life put you into the water.

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INVEST WISELY \\xa0The Folklore of Finance: Beliefs That Contribute to Investors\\u2019 Failure

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Last week I read\\xa0article in the New York Times\\xa0discussing the release of a study by the\\xa0State Street Center for Applied Research. It\'s titled:

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The Folklore of Finance: Beliefs That Contribute to Investors\\u2019 Failure

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The 2 year study tried to answer the question: "What does true investment success look like?"

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Interestingly, according to the article, instead,\\xa0\\xa0they found "that the way individual and professional investors made investment decisions was so skewed that achieving both high returns and long-term objectives was nearly impossible."

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• In the Podcast I discuss some of their findings, including
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• Overconfident in abilities
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• Unable to stay focused on long term objectives
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• Short term noise
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• Investors want to invest with a long time horizon yet react to short-term swings that derail the strategy
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• Come to distrust their advisors
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• Focus on the noise
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• Focus on short term results
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• A Culture of \\u201cbeating the markets\\u201d
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The study found that financial services firms spent 60 percent of their capital expenditures on resources to help generate short-term high performance. 60 Percent!! As a veteran of a major financial firm, I can attest that the value proposition of most major firs\\xa0is that they can predict markets and guide you through them. I\'ve always found this funny...having a value proposition based on predicting the future.

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Better, I think, to accept the uncertainties of the world, have a prudent process and focus having lots of little conversations so you can adjust as life unfolds.

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PLAN WELL \\xa0\\xa0How to Ride the Rapids Towards Retirement

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If you\'ve every been on \\xa0a rafting trip you\'re probably familiar with the term "self rescue". How to self rescue is a talk given by your rafting guide before you venture onto the river. The Guide makes it very clear. If you get thrown into the what, do\\xa0NOT\\xa0wait to be rescued. It is\\xa0YOUR\\xa0responsibility to rescue yourself.

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Self rescue involve 4\\xa0steps that you can use to rescue your financial future:

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Get to the Surface

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• Stabilize your cash flow
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• Self assess your financial health (skills, assets, debts)
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• Clearly define your 1 year objective
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Take a deep breath (you may be pulled down again)

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• Build some cash reserves
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• create margin in your cash flow (increase income/cut expenses)
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Float down river

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• Take a little time to reflect.
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• Set clear 1, 3, and 5 years objectives
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• Identify initial action steps
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Start to Swim

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• Learn from others\\n
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  • Seek out fellow travelers that you can emulate
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  • Learn from online resources and books
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• Find a guide to help you navigate the rapids
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Being thrown into the rapids by life can be scary. It\'s okay. You can self rescue. I know you can.

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What Rapid Are You Most Afraid of?

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Tweet to @roger_whitney

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