Finance 11. Paralysis Patience is a virtue, we’re told. And that’s as true in financial matters as it is in life – we can often save ourselves considerable headaches by waiting a bit and taking a sober second (or third) look at a spending or investment decision before we commit. That said, there are times when the fear of doing something wrong or doing it at the wrong time leads to a kind of investment ‘paralysis,’ which actually amplifies our risk and poses a danger to our long-term financial circumstances. This is often the case with making investment decisions. At times, investors may think that the stock market is too expensive, so they don’t invest. Or that the threat of a downturn is imminent, so they don’t invest. Or upcoming tax changes, next year’s election, a war halfway around the world, or the price of oil or gold or pork bellies or some other reason is creating too much uncertainty, so they don’t invest. The fact is, there is no such thing as the ‘perfect’ time to invest and there will always be a degree of uncertainty and guesswork involved in any financial decision. What is certain, however, is that constantly delaying or pulling back from making financial decisions based on fear or anxiety of what might or might not happen in the short term is often the exact thing that will short-circuit your ability to build wealth. For many people, this kind of constant procrastination can be a significant factor behind a lifetime of financial difficulties. Getting your financial timing perfect is a notoriously difficult thing to do –even the professionals have a hard time accomplishing it. And, over the long term, it’s often unnecessary anyway. Because market upturns last longer than market downturns (about four years versus nine months on average for the U.S. market), picking the absolute bottom before you buy probably doesn’t mean as much as you might think. So go on and get started. 12. Not living your life Our final point is perhaps the most important. The belief that money is the key to happiness can lead to serious misfortune. Not because it leads to financial destruction, per se, but because it leads to a misspent life – a life spent pursuing an abstract number rather than spending time with friends and family, seeing the world, pursuing a passion with which you’ve always been captivated or contributing time or money to a cause or organization about which you care deeply. Make no mistake: money will always be an important skill to master. But never forget that a life well lived is one that is rich not only in money, but in meaning and memories. The purpose of learning how to avoid the deadly sins of personal finance is to build and secure the funds to allow you to live your ideal life. Not realizing this essential fact is the most serious sin of all. CSANews | SUMMER 2024 | 27
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