While it's essential that you have enough invested to achieve your goals, don't get fixated on a number. Your goal when investing should be to harvest the greatest amount of significance from your money -- or what I call Return on Life™. Outlook has a critical role in financial planning and investing.
It's the one thing guaranteed to give life meaning, focus, challenge and joy, no matter what is going on at any given time, and without fail. It has very little to do with where you are but everything to do with where you are at. If you were to take a survey and ask people, "What do you think it would take to make your life great?" there is a very good chance that folks would list things like:
- Living somewhere else;
- Being able to quit their current job;
- Having lots of money.
If these are their assumptions for a rewarding life, those folks are all in for a rude awakening.
Other folks would answer the same question with, "I can't imagine my life being any better." If you surveyed those people and asked them about where they lived, the kind of house they own, or their net worth, you would find their answers all over the map. Some would report living in the country; some in the city; some in a high-rise; some in a small bungalow; some with a seven-figure net worth; some with a five-figure net worth.
The only thread that connects the members of this second group is their understanding of true wealth. That understanding is reality number two: outlook trumps position in the game of life. Where you are at (mentally) means more than where you are in terms of location or status or wealth.
For example, consider people like these who you might have observed, up close or from a distance -- you may even recognize some of your own friends or relatives:
- The grouch on the golf course who can't enjoy his round. Just a few years ago, he would have told you playing golf every day was his lifelong dream.
- The person who has billions and fame, yet demonstrates little to admire in life.
- The rising corporate star who is so frazzled she is not able to enjoy the fruits of her labors.
Material wealth is constantly in flux. Fortunately, this doesn't need to be the case for our outlook on life. While your fiscal fortunes fluctuate, it's important to remember that a balance statement is only part of a march larger picture. Answer this question: "What has changed in your life?"
If you have lost a partner, or even a job, plenty has changed. If you expressed concern that the balance in your retirement account has dropped, again, ask yourself, "What has changed in your life?" Don't let some imagined number -- an artificial, ethereal finish line out in the distance -- rob you of your joy in the present. Don't let a temporary drop destroy your outlook. Believe it or not, there are still many that exacerbate their problems by constantly focusing on their present account positions instead of the proper emotional outlook.
Of course you should be concerned when your portfolio takes a hit -- but you should also understand that it's temporary. If you are working with a financial advisor, he or she should help you see beyond that quarter's statement.
This is where the advisor part of a financial advisor comes into play. They shouldn't just talk about financial tactics and strategies; they should discuss with you attitudes and the perspectives that help you weather market storms. In other words, advisors should be advising; not selling. Warren Buffett once said: "The chains of habit are too light to be noticed until they are too heavy to be broken." By obsessing over a number, you are not able to enjoy the journey. A number on a piece of paper should not have that kind of power.
Ultimately we are all defined by our outlook on life. How did we respond to something? Did we make the best of what just happened? Did we strengthen what remained? Did we shift our focus toward what mattered most?
We should never allow our wealth or status to define us.
If we are viewing the numbers from the proper perspective, we can cruise through each day (and financial statement) with assurance that the one thing that matters inside us cannot be taken or shaken by forces outside. Outlook trumps position. A settled mind trumps unsettled markets.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.