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Why worrying about your investment is a complete waste of time

By Sam Instone - November 08, 2018

How often do you worry about things you can’t control?

Or things that don’t matter?

We’re all human at the end of the day…

But isn’t worrying simply irrational and counterproductive?

I’ve spoken about Carl Richards before.

He is one of my favourite financial writers…

Who has a knack for simplifying important concepts…

And using clear sketches to further illustrate.

Here’s one of them:


This illustration clearly shows the small percentage of what we should focus on.

After all, things that matter aren’t always within our control.

Things we can control, don’t always matter.

As investors, how do we decide what to focus on?

If you made a list of things that mattered in investing…

You’ll find most of them are within our control…

Things like asset allocation

The fees we pay…

Our behaviour…

Having the right financial planner

And deciding when to start investing.

But there’s something we can’t control…

Yet matters a lot…

And that’s the market.

We spend so much time worrying about what’s happening in the market…

When, realistically, it’s totally out of our hands.

Instead, we should funnel our energy on things we can take charge of.

So extreme market volatility shouldn’t make investors worry?

It’s only natural that we’ll be concerned if stock prices fall.

Any good financial planner will put your mind at ease…

By rebalancing your portfolio to reduce risk…

Reassuring you of your long-term goals…

Or helping you to recognise any irrational decisions.

Volatility is just a standard deviation…

Which is risky in the short term…

But not the long term.

All investment portfolios require a certain level of risk

Your financial planner should make sure that it’s at a level you’re comfortable with.

So, if any short-term volatility happens, you should be able to handle it.

Ideally, even ignore it.

What is ‘recency bias’ and why should you know about it?

It’s something we do as humans…

We look at the recent past and project that indefinitely into the future.

This particularly happens when the events have been negative.

I recently spoke to a client who 'called the top' of the market in 2011 and has sat in cash ever since...

Missing out entirely on much of the longest bull-run in history.

Too fearful to get back in.

stop worrying about markets

Whilst his capital was eroded by inflation.

Maintaining an unbiased view is difficult.

Especially when you need to be impartial about your own emotions, behaviours and decisions.

An ethical financial planner will help you with this.

And remind you that past performance is never a true indicator of future gains.

Why shouldn’t you focus on building the perfect portfolio?

Perfect is the enemy of good.

It’s also the enemy of satisfaction.

Nothing can ever be perfect (at least not for long)…

Because things change.

Striving for perfection is an impossible endeavour.

Your investment management should simply be efficient…

Align with your long-term goals…

And give you peace of mind.

It doesn’t need to stick to the rulebooks of asset allocation…

Because, at the end of the day, that may not be right for you.

It may not work for your ‘bigger picture’.

Remember what Vanguard founder, Jack Bogle said?

“There may be investment solutions better than this, but the ones that are worse are infinite.”

So what’s the solution?

Find a financial planner that will remind you to focus on the right things.

Who, when the markets fall, will have your best interests at heart.

If you’re still looking for one, give us a call.

We fix broken portfolios