Just believing in a thing doesn't mean it's true
“You are under no obligation to be the same person you were 5 minutes ago.” – Alan Watts
We experience our entire life in our minds through thoughts. Our actions are often driven by the beliefs we hold in these same minds. But there is some distance between thoughts and identifying with the thoughts – beliefs.
In this edition:
This type of thinking could do you in
This type of thinking tells two stories
This type of thinking could help you win
Also, a way to change your thinking…and beliefs.
STORY
Limiting beliefs that will slow you down
Many people hold faulty beliefs about the complexity of investing money.
These beliefs help them talk themselves out of making an effort to learn more. After all, why worry when we live in an age of more & more convenience? Worry because more convenience means more options to choose from. How can you do this well if you don’t acquire enough knowledge to make informed decisions?
Here are 5 among many objections to learning about money and some perspective to help you reframe them.
Belief #1: “I prefer saving to investing.”
Problem: This objection is not all bad and is a frequent response from the risk-averse. If this is you, at least you’re doing something & not just letting your money sit idle. But saving is extremely conservative & often offers minimal return in the name of keeping your money ‘safe’.
Reality: Saving is an important precursor to investing. Savings are important for different situations and can still be built through low risk investment products. Learning how to invest can help you grow your wealth in a way that savings alone never will.
Belief #2: “I’m not a math/ finance person.”
Problem: The world of money is full of jargon and technical aspects that make it feel unapproachable. It’s easy for even the above-average Joe to feel intimidated by all the numbers & acronyms. For this reason, many people aren’t even willing to try.
Reality: Some aspects of investing are complex and require years of study. But most fundamental concepts can be easily understood by anyone. With the right attitude, resources & approach, anyone who puts time in will be wealthier for it in the end.
Belief #3: “I’ll just let the experts handle it for me.”
Problem: This objection is a variation of #2 above. After all, investing should be left to the professionals, right? It may sound smart to leave it to the pros but do you really think that the wealthy don’t understand what their financial advisors do with their money?
Reality: Experts have a big role to play in your investment journey but you cannot rely on someone else to determine your financial destiny. Expert guidance is useful but it is important to develop a level of understanding of core principles. This will help you make better decisions AND hold advisors accountable.
Belief #4: “I earn too little to invest so why bother?”
Problem: It’s easy to feel like “...Investing is for the rich…” After all, they’re the ones who seem to get richer in markets. A lot of people put off learning about investing because they wrongly believe that it takes very large amounts of money to start.
Reality: Financial markets are more accessible today than ever before. Thanks to technology and some innovation in products, individuals can start investing with very low amounts.
Belief #5: “I’ll start later (or when I have more __________)”
Problem: The problem is you think you have time. It’s easy to procrastinate what feels difficult and this particular objection is connected to many others. Delay creates a false sense of security in sticking to what you know.
Reality: Even if you want to invest later, you have everything to gain by starting to learn early. Everything you do in the present will impact the future version of yourself. The longer you wait to understand investing, the more you stand to lose out in the long run.
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I could go on with this list. In fact, I will in the next edition.
Adopting the right mindset towards money is your first step towards successful investing.
Knowledge will help you overcome mental barriers or falsehoods and give you more control over your financial future.
NOTES TO SELF
High performers are persistent to a fault
They don’t take ‘no’ for an answer - from themselves or from the world.
They are willing to start over. Again and again.
In life, you will lose many times in different areas. In fact, you will more likely accumulate more losses than wins, even in the things you’re eventually successful at. Accepting this can be challenging, especially when you’ve had a history of wins.
But the truth is, winning and losing are two sides of the same coin.
Like yin and yang. Light and dark. You can’t have one without acknowledging the existence of the other.
I recently came upon this Japanese proverb:
七転び八起き
“Nana Korobi Ya Oki”
It translates to “Fall Down Seven Times, Get Up Eight”.
This saying beautifully captures the kind of spirit required to achieve great things. Almost with defiance.
High performers will stop at nothing to get their desired result, regardless of what stands in their way.
When you’re knocked down, it’s easy for those still on their feet to say, “Get up, dust yourself off, carry on”. Yet, it’s only your inner voice that can convince you that you should. As cliché as it may sound, it’s true that you miss all the shots you don’t take.
If winning and losing are two sides of the same coin, then perhaps the secret is to stay in the game long enough to learn enough. To get up over and over again. To persist to a fault.
THE BUFFET
Some vehicles your money can ride in
Having little investing knowledge can slow you down but it shouldn’t stop you.
One way to have your cake and eat it is to learn about investing through Collective Investment Schemes (CIS’s). CISs are financial structures that pool money from many investors to invest in a diversified portfolio of assets such as stocks, bonds, real estate, or other securities.
Here are some names that you are likely to come across and should know:
Mutual Funds (aka Unit Trusts) are open-ended funds that invest in a mix of stocks, bonds or other securities based on specific objectives e.g. a bond fund would mostly invest in bonds.
Exchange Traded Funds (ETFs) are funds traded on a stock exchange that are designed to track the performance of an index, commodity or other assets.
Real Estate Investment Trusts (REITs) are funds focused on income-generating real estate properties.
Money Market Funds (MMFs) are a specific type of mutual fund that invest in low-risk, short-term instruments focusing on capital preservation and liquidity.
Not all funds are made equal. Different types of funds have different benefits and drawbacks. Learning more will help you determine for yourself which product is best suited to help you achieve your goals.
CURIOUS
You can change your mind
Each of us is the custodian of the beliefs we carry in our brains. How do those beliefs get there? Are you willing to challenge them? Even those that you put there yourself?
Here’s a neuroscientist’s guide to changing your mind that you may find insightful.
Holding beliefs just because they are convenient is costly in the long run. It’s uncomfortable to challenge ourselves and even see ourselves as wrong. But believing in the wrong thing still yields undesirable outcomes.
Have the best week possible.
AG