Finding Your Why: An Exercise to Clarify Priorities in Turbulent Times

There’s a sea of information for investors to sort through today.  Our opinions and experiences shape how we handle money.  As ideas become organized in our head, we establish a foundation from where decisions can be made.  Over time, we manage new information and perhaps filter out themes that don’t complement our beliefs.  Increasing knowledge is key.

So, how can we accomplish this and make better decisions when investing?  Here’s an unconventional approach that works if you’re willing to invest some time now and reflect later.   

Locate a quiet spot at home or the office without your phone for the next thirty minutes.  Make a list of everything that makes you happy and everyone who carries importance in your life.  It may be helpful to group your free-thinking time into the following categories: professional, personal/family, fitness/mental wellness, and money.  Brainstorm for fifteen minutes listing all your priorities in the categories you set. 

Now, write down the amount of time you’re currently spending on the activities and people that are most important to you.  In the remaining ten minutes, what’s jumping out at you as you reflect on your list?  Are changes necessary based on where time is allocated?      

Ok, times up.  What does the above exercise have to do with investing?  In my opinion, everything.  Too often, investing is labeled by outcomes, choices, strategies, taxes, and spendable income.  Mixing these themes together won’t necessarily generate better investment decisions.  What’s missing?

Investing needs to be rooted in who you are and what you want to accomplish.  Your beliefs should incorporate where you enjoy spending your time and who you’re hanging out with.  This includes integrating ideas and feedback from a spouse or significant other.  When you explore your priorities first, you put the emphasis on your values and goals, not dollars.    

The answers to the above exercise may be the beginning of refinement to your financial plan.  Starting with personal values, not account values, allows investors to weather this turbulent market.  Think about quantifying goals first and portfolios second.  Unfortunately, many have this sequence backward. 

Not investing the time to gain clarity on your “why” makes it difficult to stick with a plan, any plan.  You’ll invest for a while until a better opportunity or crisis erupts that requires your time and money.  Reacting disturbs compounding wealth.  Without a foundation set in values and purpose, it’s just too easy to lose interest and change your approach when the skies are dark. 

Another benefit of listing out your priorities is the ability to revisit them over time.  Calling a time out and reviewing your list ever so often provides the opportunity to reflect on what’s important.  Has anything changed including your preferred timeline?  Integrating new information may positively influence your approach to investing.   

Ongoing investing requires a sense of purpose and periodic reflection.  Goal clarity directly influences cash reserves and choices on where to invest.  In today’s volatile markets, it’s easy for investors to feel compelled to make changes or react to what’s happening.  The ability to sit still in difficult times takes practice.  This is made a little easier by having confidence in your plan which begins with your goals.

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