- Patience - It has become cliche to refer to investing as a marathon and not a sprint. Or perhaps a lifelong journey. As with all analogies, these are imperfect but they do at least point in the direction of reality. For most investors, the largest goal is also the farthest away: retirement. And if a goal is 20+ years away, patience in investing is a virtue. The markets are volatile, and big swings up or down can test the resolve of the most disciplined savers and investors, but the historical record may suggest that those who make their decisions on the short term market view under perform those taking the longer view.
- Love - Yep, love matters in finance. Too often, money operates in people's lives like this pile of numbers disconnected from our emotional and spiritual selves, when money has become in the modern world one of the primary outlets for the expression of our value systems. At DRW Financial, when we develop a financial plan for a client, the conversation starts with a robust discussion of values, particularly those around family, community, and legacy. The idea is that once we can identify and articulate what we truly love, those people and things that we really value, the desired composition of the financial plan becomes clear and the investing philosophy follows along.
- Charity - Closely related to the discussion of love and values above, charitable pursuits can be a meaningful piece of an overall investment plan. Supporting a charity or non-profit can certainly bring financial benefits in terms of tax management, but also has the potential for wider impact. Choosing a worthwhile charity can provide a family with a point of external focus and an opportunity for perspective. The old saying goes "you can't take it with you," but you can certainly choose to multiply the benefits of money earned during life by allocating some to investments in community and helping others.
- Wisdom - We learn from our mistakes, we learn from those who are a little further along life's path, we learn by taking a deep breath and just observing the world around us...we are always learning but there is always more to learn. Wisdom may very well be the acknowledgement that we do not know all there is to know. The realm of investing is definitely one that requires humility and wisdom. "The best laid plans of mice and men often go astray" is apt here, as the complexity of the markets and the unexpected in life conspire to wreak havoc on a financial plan. Wisdom in financial planning may involve a wider discussion around values to determine which goals are most important, and which are least. The conversation should address the possibilities of a stumble or breakdown in the plan, and what those events might look like, what impact they would have on the pursuit of goals.
Most investment portfolios are going to hold some stocks and bonds, mutual funds, maybe some real estate or insurance products, but if they do not have an allocation to Patience, Love, Charity, and Wisdom, do those portfolios really represent the values of their owners?