Improving Investor Behavior: Decide Enough!
At a party hosted by a billionaire in Shelter Island, the late Kurt Vonnegut informed his friend, author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller. hadn’t won thanks to his very popular novel, “Catch-22”, in all of its history. Author Heller replied: “Yes, but I have something that he will never have – enough.”
From the book “Don’t Count on It” by the late John Bogle, this story is a welcome reminder of the dangers of comparison. Comparing yourself to others often leads to feelings of inferiority or regret: there is always a bigger fish in the sea. As President Roosevelt said: “Comparison is the thief of joy.
Yet the comparison tends to be the lens through which most people view their finances. Some people assume that wealth is the amount of money you have in the bank or the size of your investment portfolio. Others judge wealth by the size or neighborhood of their home or the number of cars or toys they own. Some people measure wealth by income.
But my definition of wealth is much broader than matter. People can make $ 100,000 and spend $ 125,000. This is not how wealth is built. Likewise, that same person may spend less than what they earn, but spend 80 hours away from friends and family working to earn it. Their work may be in an uninteresting area or for a cause in which they have no desire to help. Or they work with people who consume their energy, without encouraging and contributing to it.
What determines a rich life depends on your relationship with money and what matters most to you. There are many ways to get rich that don’t involve money. I believe that one of the most valuable measures of wealth is the ability to control your time. The freedom and the time to pursue whatever you want is a true measure of your wealth. Another is the ability to control your goal – your why. Is your work done only for a salary? Or do you feel like you’re contributing to something bigger than yourself? A third would be your relationships – who you’ve chosen to do things with, collaborate with, or just hang out with. Finally, your income could be having enough cash to do what you want to do, with whom, when, and for how long.
To be content in all things is a rich life. When you’re happy, a number doesn’t matter – your state of mind matters.
Money doesn’t make life less stressful. On the contrary, for many, it makes life more stressful. With money comes the need to keep it, to protect it, to keep it, not to lose it, and so on. Money, however, is only a tool, a resource to give you the freedom of your efforts. Hoarding does little good; put your resources at the service of your works.
Yet some people are more prone to anxiety than others. No amount of money is enough to quench their thirst or quench these deeply rooted issues:
What if the market collapses and doesn’t come back?
What if inflation is much higher than expected?
What if my candidate for the White House is not elected?
What if I lose my job?
What if the economy goes into a terrible recession or depression?
What if I choose the wrong investments?
What if I save too much or too little?
What if there is another pandemic?
You can drive yourself crazy by chasing those “what ifs”. There will always be something to worry about when investing, planning for your financial future, and building or preserving your wealth. However, the concern should not focus on these particular issues but on learning how to deal with the unknown in a healthy way. If these questions constantly undermine your self-confidence and take up space in your brain, you’ll never learn to feel satisfied. As a friend said, “Worrying is a misuse of the imagination. “
How you think about these things is essential – it’s your state of mind. Developing a time and income plan that offers flexibility is essential, but most people spend more time planning their vacation than they do when they retire. A vacation lasts a few weeks – a retreat for two, three or four decades. So it is wise to have a plan.
Nick Murray puts it best in “Simple wealth, inevitable wealth, “ “No matter how much money you have, if you’re still worried you’re not rich.”
Steve Booren is the founder of Prosperion Financial Advisors in Greenwood Village. He is the author of “Intelligent Investing: Your Guide to a Growing Retirement Income”. He was named by Forbes as Top Wealth Advisor 2021 and Top Advisor to Barron in 2021 by state. This column is not intended to provide specific investment advice or recommendations.