Do Without Doing
Retirement planning can be a daunting task, especially when it comes to investment strategies.
Many people believe that putting in effort and working hard will lead to desirable results. However, in the world of finance, this is not always the case.
The ancient Chinese saying “wei wu-wei” teaches us that sometimes doing less can be more effective. This lesson can be applied to financial planning as well. Instead of constantly trying to beat the market or chase past performers, investors should focus on what they can control.
For instance, when choosing investment strategies, it's essential to take your own preferences and sensitivities into account. You should also diversify your portfolio to moderate ups and downs and be mindful of the impact of fees. Additionally, it's essential to exercise discipline when emotions threaten to blow you off course.
One of the most critical actions for successful investing is to maintain your desired asset allocation. Regularly rebalancing your portfolio, which reallocates money away from strongly performing assets into the laggards, can help you achieve this. However, please note that rebalancing is a disciplined, premeditated activity based on each person’s circumstances.
On the other hand, constantly tinkering with investments does not correlate with success. Many people fall into the trap of trying to beat the market by following investment trends or chasing past returns. This kind of activity is likely counter-productive and can add costs to your investments without any associated benefit.
It's important to remember that investing is a long-term game.
Constantly switching fund managers based on past performance, attempting speculative changes in your asset allocation, or reacting in a knee-jerk way to news events can lead to poorer long-term returns. Instead, act on your financial plan, focus on what you can control and stay disciplined in your approach.
The key to successful retirement planning is to let go of what you can't control and focus on what you can.
Take a lesson from the ancient Chinese proverb, “By letting it go, it all gets done. The world is won by those who let it go. But when you try and try, the world is beyond the winning."
For a more detailed discussion on this topic, please feel free to contact us. Our team are always available to answer your questions and to help you with any of your financial planning needs. Here’s what we offer: A cup of coffee… and a second opinion.
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