We do not spend a lot of time in society focusing on philosophy. Sometimes, I think, people believe philosophical discussions are not productive. However, I believe that if you want to lead a successful life, a congruent life, a life free from wanting to do one thing while actually doing something else, then you have to address your own personal life philosophy.
Your philosophy, your beliefs of how you want your life to progress, have to be clear in order to achieve what you want to achieve. To put it another way, if you do not know where you want to go you are not going to get there.
So here is the thing. When it comes to your money, you need to define your investment philosophy. Yes, everybody wants to make money. But that is not a philosophy; that is a nebulous goal.
To get at your philosophy, let’s consider three key questions:
Do you, every single month without fail, put aside some money for investment? Before you answer, realize that when I say investment it could be in a money market account with a paltry return. And, of course, no matter how bad the return, some money should be in cash, no doubt. It might be money you put into stocks, bonds, mutual funds, REITS, or something that I will get into at another time, which might be considered to fall into a class of what are termed uncorrelated assets.
How much money are you setting aside for investment each month?
If you are not saving money each and every month, why not?
We live in a world where the consumer marketing machine has far too much influence over what we do and how we think. From my point of view, the industry of getting people to save money pales in comparison to the industry that gets folks to buy stuff.
Think of this. Someone decides to create a media room in their home. So they buy a huge curved screen ultra-high definition TV. Now, go back 10 years or so and many folks were using regular television sets, the boxes. You might still have one in your home. Then we moved to plasma screens, flat panels. Then to LCDs. Then to LEDs. Then to high definition. Then to ultra-high definition, etc.
I think a media room could be a wonderful thing. The question is: Are we putting our money to its best use? Are we building a wonderful, sustainable lifestyle?
Certainly, it is great to have things we like. Yet, shouldn’t those things truly add to our happiness? I mean if you have a 55 inch high definition flat panel TV in your home, do you really think that a 75 inch curved screen in ultra-high definition will make you that much happier, or just relieve some of your hard earned money from your pocket?
If a person took a quantity of money and bought stuff that didn’t make them happier or took the same amount of money and invested it, I would say investing would win every time. Wasteful spending is simply a way of destroying hard earned money. Even an investment that underperforms is better than wasting money.
It is fine to enjoy yourself, but today far too many people buy things they do not need. They buy into planned obsolescence. They purchase some soon to be obsolete piece of technology, forever lusting after the latest and greatest. They are essentially addicted to spending.
I suspect you would agree that a good lifestyle, a sustainable comfortable lifestyle, where we responsibly get to live our dreams makes sense. Practice follows from philosophy, especially if we remind ourselves of what our philosophy is.
It might pay to write down your investment philosophy – a kind of listing of your investment beliefs – on an index card and keep it on your nightstand, or on your refrigerator or in your wallet. Or you could make document and use it as the screen saver on your computer, tablet or smartphone. Here is an example of what someone might write down:
“I believe that all investment begins with being thrifty. If I do not save money I cannot invest it. I believe that investing will help work towards my goal of a bright future. I believe that my investments should be diversified. I do not want to put all my eggs in one basket.
I believe I should maturely assess the risk of any investment and strive to have a portfolio of investments that, when take as a whole, expresses whatever my individual tolerance for risk is, based on where I am in my life.
I believe I can live my dreams if I plan for the future and investing is a big part of that. I believe that I should not procrastinate when it comes to making those plans. I believe I should work with someone who truly cares about helping me and knows how to.
I believe I can live this philosophy I have written down, by taking action and putting it into practice. The time is now.”
What’s your investment philosophy?
Scott McGimpsey- February 2016
This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC