What I'm reading #40: 5 concepts to embrace that will help you invest and live better
Connecting life principles to investment principles is a powerful way to anchor theoretical concepts in reality.
It can also assist in making sense of financial concepts that are frequently regarded as overly complex...
Our lives are the result of the decisions we make every day.
Just as in investing, the power of these decisions compounds over time.
Finding a high-quality decision-making process that works for you is critical.
For me, this means understanding what great looks like and getting it.
Here are 5 concepts to embrace that may help you invest and live better.
Given life's profound uncertainty, it can be difficult to remain optimistic.
Most of what happens in our lives is unpredictable, and forecasting the future is impossible.
Like everyone else, you live your life fully without knowing what's going to happen next.
It's the same principle for investing.
You can have a good investing experience without any idea of what the markets will do.
You can't predict which of the S&P 500 companies will succeed and when.
Instead, you're relying on people's proven ingenuity to solve problems and improve their businesses.
The key is to plan, not predict.
Without uncertainty, there wouldn't be any opportunity.
Planning can help you feel empowered instead of defeated.
Consider all of the unexpected turns your life has taken and the opportunities those turns have created.
While you couldn't predict the outcomes of your decisions, you intuitively understood how to assess your feelings about the risks and opportunities presented to you.
Similarly with investing, people avoid it because of uncertainty.
However, your experience has given you the tools to be able to deal with it.
Unfortunately, we can't control the markets.
But we can control how much risk we take and whether we choose to have a financial planner to help us make the right decisions. In particular:
- Helping identify purpose, priorities, and tactics for the household.
- Determining the amount needed to fund perpetual lifestyle and planned legacy.
- Creating and updating projections based on investment analysis.
- Providing an integrated strategy that protects and builds your family's wealth.
While having a plan is important, cultivating flexibility will make the road easier in both life and investing.
Consider someone you know who has overcome significant obstacles.
Were they rigid or agile?
Consider the power of compounding if you need the motivation to stick to your plan.
We know there are major financial benefits.
Learning from the past allows you to make better decisions in the future, and those lessons accumulate over time.
5. Live life
Learn from your failures and celebrate your victories.
It's not so much what you decide, it's how you decide.
Approach others with compassion.
Investing is a process, just like life.
If you've followed a solid plan to the best of your ability, you've put yourself in the position to achieve success.