4 Sketches That Perfectly Sum Up The Challenges of Investing

Note: The sketches in this post have been used with the permission of the creator. I want to thank my friend Carl for allowing us to use his illustrations. To license for use on your own website, visit behaviorgap.com/store, or contact hello@behaviorgap.com.

 
People are visual beings. Even if we understand a concept mentally, sometimes a visual aid can go a long way towards driving the idea home. Carl Richards at Behavior Gap knows this intuitively, and has a knack for conveying even complex financial ideas simply and elegantly. I hope you enjoy these sketches as much as I do, and find them useful in your own financial life.

 

1.  Discomfort with uncertainty keeps us from doing scary (but necessary) things

One of the keys to financial goal setting is deciding your tolerance for risk. Meaning, how comfortable you are riding the ups and downs of the market between now and when you’ll need to withdraw from your savings for things like retirement expenses. No one knows for sure what the market will do in the future, so “risk” really means uncertainty. Becoming more comfortable with uncertainty can make it easier to take the necessary risks to reach your goals (and yes, most people need to take some degree of risk to make their money grow).
 

 

2. The real value of financial planning is matching you rmoney with your values 

With all the financial commentary and press out there, it’s easy to forget that money is just a tool; it’s a tool to get you and your family from where you are, to where you want to be. Too many people obsess about the specific tools instead of their desired outcome, and then are disappointed when the outcome isn’t ideal. Start with the outcome you want, based on the values you hold dear, and then choose the tools that fit you best.

 

 

3. Financial success comes from repeating the same process, over and over

No financial plan will ever be perfect, but following a process (goals, plan, investments that fit the plan) and repeating it diligently will get you where you want to be.
 

 

4. Smart investors base their decisions on goals, not their ego 

Don’t risk your own goals because of shiny distractions. Your neighbour’s portfolio growth, the talking head on TV, and the flashy news headlines are all distractions that can keep you from reaching your goals.
 

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