Inflation eats away at money languishing in a bank or under a mattress. The fear of making a mistake rightly makes us pause before sinking our savings into an investment vehicle.
But we are emotional beings, and often need to make important decisions based on limited information. Since this will never change, errors are inevitable; they should be acknowledged, learned from, and planned for. As George Soros, a highly successful investor, correctly observed, “Once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only failing to correct our mistakes.”
Being very specific and clear about your goals when creating your financial plan is an effective way to minimize errors. A well organized, comprehensive and specific financial plan will help avoid the temptation to cash out when you hear colleagues taking about taking expensive vacations, buying a new car, etc. It also helps to remember what you’re risking before you decide to shift into more volatile investments. Being honest with yourself and a trusted advisor at the planning stage will give you greater confidence in your plan, confidence that, in turn, will spare you from many sleepless nights and premature gray hair.
Here is some sage wisdom that I have found particularly helpful:
- Have realistic expectations about the future.
- Let go of outcomes we can’t control.
- Do second-guess; trust your plan.
- Don’t measure yourself against others.