the art of purpose
- Letting goals steer your investment journey seems practical, at first but as you journey on, you become wary of risks, lose grip on confidence, and turn short-sighted. And before you know it, you’re veering off course, charting new paths, and replacing your original goals with unexpected detours. Money has a high emotional quotient and setting investments solely based on goals undermines its influence.
- Financial goals as a preamble to investing is overrated. It subverts “the process,” and makes you fixate on outcomes to the point of jeopardizing your whole investment landscape. This approach pushes you to adopt rule-based thinking (do X to achieve Y). It limits your ability to see beyond quantifiable progress and excludes other essential aspects of investing.
- A cohesive approach to investing is one where you don’t just set goals but also adopt practices that orient them to your core (personal) values and inspire you to keep going. Cultivating habits & developing relevant skills leads to growth and improvement, regardless of outcomes.
It’s time to redefine your basic understanding of
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Finance
- Finance is largely guided by behaviours and behaviours vary. Investor psychology suggests that your sense of satisfaction about money is implicitly led by money lessons you grew up on and you may conform or act against ideas based on your past experiences particularly from your childhood.
- Money and its role in your life is critical in establishing your relationship with it. Money is not the cause of wealth (or the lack thereof), it’s the effect. The effect of intangible values such as discipline, self-sacrifice, commitment etc. It doesn’t hold any intrinsic value unless you create an experience around it. Both earning and spending money can result in positive or negative experiences and they’re usually inversely proportional.
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Money
- if you earn money through an experience that leaves you feeling uncertain, overwhelmed, tensed, or discomforted, chances are you’ll end up spending it on fixing those exact problems. So, adopt values that’ll help you use the medium of money to create experiences that bring a sense of satisfaction to you.
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Wealth
- Wealth is accumulated and sustained through consistent effort – or habits. Consider goals to get a direction but cultivate habits to sustain the journey. Habits nurture skills (particularly behavioural skills) that help you make better financial decisions. Compounding effects are witnessed through habits while goals let you settle for linear growth. The task of investing is simple and boring. It demands repetitiveness and delays gratification. Most strategic efforts demand long-term orientation to results. Think and act long-term.
- Risks are grossly misunderstood and goal-backed investments vastly distorts risks. Risks embedded in investments can be learnt and understood but risks that are independent to your thought-process must be considered or rejected based on things that you value. Some non-negotiable values common to most investors include time, maintenance, competence,
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Risk
- efficiency, stability, simplicity, quality amongst others. And your best shot at protecting these values is in recognizing when it’s time to stop taking risks that might harm them, no matter how significant the potential gain.
- Know when you have enough. The tools for building enough are remarkably simple and doesn’t require you to trade your values for it. The mathematical figure to ‘how much wealth will be sufficient for you?’ often ignores the aspect of your relationship with money. Two important skills can help overcome this goal.
- 1. Hone the “skill of cherishing: Less is more.” To pass on chances or opportunities, more so when the odds are in your favour, is a skill. This isn’t about frugality as much as it’s about simplicity. Stopping yourself from spending on things or experiences that do not resonate with your core values is already an additional source of income. When you’re unable to break the addictive cycle of “more” each step forward pushes your “wants” two steps ahead.
- 2. Another critical skill is to own your aspirations and not let anyone else call the shots. Align your goals with your core values to ensure your pursuits are meaningful to you. This is highly critical in the internet age when comparisons drawn for pleasure are confused for values. Self-improvement including lifestyle choices when used to fuel hard work produces positive results but diminishes returns if it constantly generates a sense of inadequacy amongst the ever-changing social media peers and cohorts.
These hacks are not just limited to investment decisions. They’re hacks to improve your quality of life. It detaches you from the result and helps you focus on the process. Obsessing over outcomes can lead to losing focus on what makes them meaningful in the first place. Not to mention, it can trick you into going after unethical practices. Pick goals that align with your core values and pick them after a thorough understanding of the process involved in achieving them. And while you’re at it, ensure your goals are realistic.
We’re all about passive influence, gently nudging conversations through your financial journey that lead you towards a fuller and enriching life.