Financial planning: don’t stress over things you can’t change, concentrate on what you can
Written by Carl Turner on March 04, 2017.
When it comes to your investments, you have to learn to accept that there are a lot of issues that you have absolutely no control over. With so much financial information at our fingertips from up-to-the minute share prices, expert commentaries, predictions and analysis, it is very easy to get stressed and start worrying about every minute detail which affects your investments. That is an awful lot of wasted emotional energy.
My advice would be to stop worrying about what you can’t control and use the time and emotional energy that you free up to change the things you can. And if you find it difficult to distinguish the two, here’s a handy list!
Elements of financial planning that you can control:
• Putting in place a long term financial plan with clear objectives
• Budgeting monthly to enable you to save regularly and consistently
• Managing your cash-flow in a sensible way
• Paying down debt and staying debt-free
• Making the most of a company pension
• Understanding your tolerance to risk and investing accordingly
• Setting yourself clear guidelines of when to invest and when not to
• Educating yourself to better understand financial matters
• Ignoring media ‘noise’ on investment and avoiding knee-jerk reactions to dramatic gains and losses
• Ensuring that you have a diversified portfolio of assets
• Investing through a reputable investment manager with a proven track record
• Regularly reviewing investment performance
• Protecting your assets with life and health insurance and critical illness cover
• Seeking advice from a qualified financial adviser who has your best interests at heart
Elements of financial planning that you can’t control:
• Currency fluctuations
• Tax legislation
• What happens to interest rates
• Market rallies
• Corporate mergers, acquisitions and sell offs
• Unemployment rates
• What other investors are doing
• Government policy, even if it impacts on your investments
• The media
• Regulatory changes
Of course, you should take an interest in all these matters because they will undoubtedly affect the performance of your investments but as there is nothing that you can do to change them, don’t waste time and energy fretting about them.
When you stop worrying about what you can’t control, you have the time to change the things you can. Financial planning is a long-term game so take effective action in the areas you can control and let the rest go.