Have you ever gotten lost in the woods? Picture this. You’re out exploring an area in which you’ve never traveled. You don’t have a map of the forest, because you figure you don’t need one. You’re relying on your keen sense of direction. You believe that you can find your way to the other side sheerly by instinct. But, are you right? Can you really find your way through the woods without a map?
It turns out that quite a bit of research has been done on this question. And what happens when scientists put people into the wilderness without a map? How do these people move? Surprisingly, they walk in circles. We tend to believe that the “walking in circles” concept only applies to people who don’t know what they’re doing. But, in reality, we all do it. Without a map, we simply don’t know where we’re going.
So, what does this have to do with investing? Well, just like people mistakenly enter the wilderness without a map and think they’ll be great navigators, people enter the world of investing without a map and think they’ll be great investors. Now, what do I mean by a “map” when it comes to investing? I’m talking about a life plan. I’m talking about your values. What is it that you want to get out of life? It’s only when you can satisfactorily answer this question that you can become a good investor.
One very big mistake people make when they start out as investors is thinking that investing is all about money. Investing is financial on the surface but, in reality, it goes so much deeper than that. The returns you get from investments are seeds to plant in other areas of your life. If you don’t really know where your life is headed or what you are seeking to accomplish, how can you possibly develop a sound investment strategy?
As cold and calculated as it may look on the pages of the Wall Street Journal, investing is really a deeply personal activity. You invest so that you can improve your life and the lives of those close to you. When you are deciding where you should invest and how much time, effort, and money you want to put into your investments, you’ve got to think about the activity on a personal level.
Do you have a family? Have many children do you have? What kind of future do you foresee for them? What kind of house do you live in? Do you want something bigger? Do you want a house in a better location? Do you want to move to a different area? If so, is it going to cost more? What kind of car do you want to drive? Where would you like to go for a vacation that you’ve never been able to afford? What about charity? What causes do you care about? Where do you wish that you could give more?
These are the kinds of questions you need to ask yourself. It’s pointless to start out by asking, “How much money can I make?” if you don’t know what you want to do with it. Instead, begin by asking, “What do I want in life?” Then, and only then, can you ask the question, “How much money do I need to make that happen?” If you would like any help on understanding how investing fits into your overall life goals, feel free to reach out to us for a free consultation. We’re here for you, not just to help you make greater investments, but to help you live a greater life.