Are you taking your medicine when you invest?

A child’s face says it all when you ask them to take their medicine.  They grimace. Often the taste is horrible. As a parent, you want them to get over the taste because the medicine will help them feel better.

As a parent, you want your child to postpone immediate gratification on the basis that deferred gratification will have a better outcome. The message is simple “Put up with the bad taste in your mouth, you will feel better in the future.”

When you invest, when does it ever feel bad?

The investment industry likes to sugar coat all decisions.  The purpose is immediate gratification to help you feel good about the decision you are about to make.  The chances are that if you feel good about it, you will proceed.

The reality is that, like medicine, all your investment decisions are not supposed to feel good now. A decision that feels right may not be the best decision for your future.  The best or right decision you make today may feel bad.

How do you make the right decisions, not just the ones that feel right?

A good friend of mine tells the story of an old school friend of his who has become a very successful St James Place Wealth Manager.  Whenever they occasionally meet his friends exudes positivity, he is always smiling, confident and full of life.  When you meet people like this, they can be infectious.  Their positivity rubs off. It feels as if every decision is the right decision.

The big question for investors, are you being sold or advised?

Clearly, most investors are dubious if they were dealing with someone whose title is ‘financial salesperson’. It brings up the wrong emotions. No one wants to be ‘sold to’. Rarely do you ever get anyone using that title. Instead, they say they are a financial advisor or wealth manager which means your defensive emotions are calmed somewhat.  But the title doesn’t mean anything.  They could still be a salesperson.

Ask yourself a question, if a salesperson, adviser, wealth manager…. whoever you talk to about your money, stirred your negative emotions, what would you do?  Proceed as they suggest or pull away from the decision? It’s really hard emotionally to do something that goes against your gut feeling. So taking your ‘medicine’ can go against all your emotions…but it still might be the right thing to do.

If you want all the financial decisions you make to feel right, which means you never take the medicine, you need to accept some of your decisions may not be right and the longer-term consequences are very unsatisfactory. That’s the pleasure of immediate gratification!

If you are prepared to have your decisions and ideas challenged, then talk to us. If you want clear insight and wisdom, then talk to us. If you want a discussion to understand the outcomes, then talk to us. But if you prefer being told what you want to hear to make you feel good, we are not the people for you.