Life in the Fast Lane. How Long will it take to Reach Your Happiness?
Think of Investing like planning a road trip, it’s a long term process rather than one single event. You first need to know your final destination, have a plan for the best route to get you there in the time you have with the amount of risk you are comfortable with and then finally pick a vehicle for the trip. A clear image of your destination will get you further than heading off in any direction. It’s better to be pulled by your dreams than being pushed by your fears. Having a dream vision with actionable daily habits will drive you even faster to achieving what you want, you will be pulled by your purpose, vision or mission in life rather than being pushed by a ‘to do list’ of chores.
Living without clear goals is like driving in thick fog. No matter how powerful or well engineered your car, you will drive slower, making little progress. Having clear goals will clear the fog immediately. Clearly defined, written goals enables you to put your foot on the accelerator. Having set goals will clear the fog immediately by thinking about your future and where you are going and what they can do to get there. Dr Edward Banfield of Harvard said that long time perspective was the most important determinant of financial and personal success in life. It's so important in fact that one study from Harvard in 1953 showed that having written goals can actually double the amount of money you can make in a lifetime. The ability to think several years into the future whilst making decisions in the present. Saving every month for 30 years and you can become a millionaire by the time you retire using the power of compound interest.
‘We all have a plan until we get punched in the face’
Mike Tyson
Any plan is better than no plan but what is it you want from life? Investing is a plan often a boring plan. It’s like having a map to your destination. You start out with an amount of fuel in your car (like the cash in your bank), when you are running low on fuel you need to go and top up your tank to enable you to keep heading towards your goals. Following a map and directions in a set order over a defined time period to get the results you want. Most people will never know what they really want. What do you want is too imprecise to produce a meaningful and actionable answer. You must take control to get the results you want
‘What are your goals?’ To replace the question, take a step back and look at the big picture. As Tim Ferris says ‘What is the opposite of happiness? Sadness? No. Love and hate two sides of the same coin. The opposite of love is indifference. The opposite of happiness is boredom. Excitement is a better definition for happiness and precisely what you should strive to achieve. When people say follow your passion or bliss, it’s the same concept as excitement. It isn’t what do I want or what are my goals but what excites me. Remember boredom is the enemy, not absolute failure.’
Practice ideal thinking in everything you do. Create a 5 year fantasy by thinking what you would do if you couldn't fail. What would you life look like if everything was perfect. Imagine no limitation. Practice 'blue sky thinking' says Charles Garfield from the book Studies of Blue sky thinking and peak performance. What would have to happen to me to have created my perfect future? Dream big dreams. Begin with the end in mind.
We greatly over estimate what we can achieve in a year and greatly under estimate what we can achieve in 5 years.’
Peter Drucker (1909 –2005)
Happiness is the progressive reality of a worthy idea meaning happiness emerges after taking steps or making progress toward getting your goal in life. Some people call this having a purpose. Where you have clear exciting goals and ideals you will feel happier about yourself and the world. You will feel internally motivated to get up and go every morning. The future is going to be better than anything has happened to you in the past. There are no limits. Having a purpose and having progress towards that purpose equals happiness.
That being said it is not desire along that will make you rich. Desire is important; although far more important is design. As Daniel Priestley says ‘We live in a world where successful outcomes are designed to occur far more than they are desired into existence.’ The Ferrari accelerates to 70 mph because of the engineering. The passenger seat isn’t put there for a guru to sit and stir up the driver’s emotions and only goes faster if he is read motivational quotes when the key is turned. A skyscraper building doesn’t fall down in a storm because of its architecture and construction not because of a well constructed life plan. It wasn’t wished up by thinking positive thoughts and that morning’s goal setting session. These are amazing feats of human innovation had something to do with desire but mostly it was the design that got the job done. The Volvo in the slow lane can comfortably reach speeds of 70 mph even if it’s driven your old aunty Deirdre just by putting her foot on the accelerator. This is because the car has been designed successfully to achieve those speeds. If that same car wanted to travel at 300mph no amount of training, goal setting and dream boards will make that car go that fast, it's just not designed to drive at that speed.
Successful investing succeeds because it was designed to succeed. It is an ecosystem of asset (different types of investments) that have been brought together so the sum of all the parts are greater than the individual assets.
Decisions are essentially bets. There are no right or wrong answers only the best decision with the information you have at that moment. The winner of the Nobel prize in 1978 Herbert Simon said It’s impossible to have perfect and complete information in any given time to make a decision. What information consumes is the attention of its recipients. Hence a wealth of information creates a poverty of attention. We humans can only think about a few things each day like a phone battery we start the day off at full charge and as we do each task our will power is depleted. We get more stressed the closer our batteries get to being empty each day. Our problems with money is often the last thing to be tackled during the day as our daily problems from life always seem more urgent and important, which is why it’s often not done at all. We need to allocate that attention effectively. Time is like a river that forces us to make decisions we can't stop the flow. This affects our path. Our individual DNA gives us individual strength and weaknesses. We need to know ourselves and our strengths and double down on these as it’s much easier to get from good to great than to get from poor to mediocre.
A plumber may have all the available tools to him but if he doesn’t have the knowledge, skill and experience to masterfully use these tool then these tools will be worthless.
Experience and education gives you confidence to make decisions. However you can’t make a perfect decision, there is never fully access to all the information in the market and you can’t know what other people are thinking all the time.
With your investment decision you can take the slow winding route, the faster , more risky route however you can also have a balance between the two. Go the third route, the road least trodden. Have balance. Not too hot, not too cold but just right. This is the Goldilocks strategy. It’s using the balance of diversification, where the easy road turns hard and the hard road turns easy. It’s hard to start with as you need to make decision that are right for you. This will depend on a number of factors like your age, your risk tolerance and your capacity for loss (how much you can afford to lose). It is making these decision initially and having the courage to stick with them that is the hard part.
Think of a Seesaw you need a combination of factors to have balance in your life. There are a number of key decisions you need to weigh up and some of them are not as obvious as they initially seem as over time the difference between risk and reward change over time and between individuals. Having not enough balance will mean you will fall faster from the highs and land with a bump on the floor. You need to decide between inflation and volatility, between security and flexibility and time verses money and how well you want to eat verses how soundly you want to sleep.
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