For those who follow this page closely, you are already aware I have been reading Morgan Housel’s Psychology of Money book that I finished this past week.
A central theme in this entire book is that the world we live in is very complex. But more importantly, the world of money is particularly difficult for no one’s experience is like any others.
To make matters worse, there are so many teachers or confessed experts out there who purport to have the key to money and wealth. It is common for the average person who is alive to their finances to read, follow, attend seminars and listen to all sorts of things online, especially in this digital age.
The multitude of information in personal finance today is beyond what any single individual can comprehend. But the funniest thing of all, the actual decisions for most people are made in the most unlikely places like dinner tables, places of worship, entertainment joints, places of work or based on things people hear from the media.
In fact, what is never said by most people is that most of their investment decisions are based purely on hearsay with no effort to verify the facts of what they have been told. Yet, the decisions are implemented using real money that someone has saved through blood and sweat.
The troubling thing is, how can you work so hard and sacrifice so much for your money, yet be so quick to expend it without doing your own independent evaluation of your investment choices?
Here are five facts that you must take into account to help you navigate the money game:
- If it sounds complex to you, it is most likely wrong for you – the rule of thumb is never to put your money on something that you do not understand. As I have always said on this page, the most consequential things in life were designed to be simple by nature. Each one of us is born with a natural ability to navigate the world on our own terms –so if you cannot comprehend what others are saying, just accept that was not meant for you and move on; your door is not that one, but right ahead;
- The average person is driven by greed for money –truth be told, no one who doesn’t need money in our modern world. If I knew for certain a place I could mint money easily, I would not tell others about it just like that. The natural instinct of our human nature is to hoard as much as I can for myself, for as long as I can. So, when you hear people telling you there is money in this and that place, just be sure there isn’t any money there –if it were there, they will be busy making it for themselves and not telling you;
- Every investment decision ultimately boils down to a personal choice – you may read as many books as you can (and I really encourage you to) or listen to as many experts and opinions as you can get hold of. However, the purpose of doing all the reading, research and information gathering is not for those folks to decide for you. The purpose is to empower you to make better decisions for yourself. The decision can only be yours and yours alone;
- Tame your greed for money to make better decisions – most people, get lured into bad investments, some get conned and others led into criminal activities in an attempt to make quick money. This is in contravention of the creators’ order –check around, anything that is highly valuable is never easily left where anyone and everyone can find it. They require you to go the extra mile or put in more effort than the average person to find it. Think of it, where are gold, diamonds, oil and all great minerals found? Why would you think it will be different for money – the ultimate measure of the value of them all?
- Be patient and trusting of your instinct more than your impulses – there is something in each one of us that guides us from deep within. I always called it our guardian angel. Always take time to reflect, turn over it in your mind and submit to the creative forces within you. If you learn to trust these inner forces, they will always direct you to the right path when there are so many noises around you. Mostly, it will come like a gut feel or a sense of peace when it is right; when it is not right for you, it will come as a sense of uneasiness or some lack of focus.
Master this and never doubt your feelings when you are dealing with your money. This requires you never to be in too much of a rush when making major investment decisions to allow this power inside you to commune and guide you.