Everyone defines success differently, so hanging a price tag on financial success is difficult. If your definition of financial success involves private jets, then you’ll have a much higher mountain to climb than those with more modest aspirations. Choosing between varying degrees of financial success is a problem most people would love to have.
Achieving financial success doesn’t mean you have to run a hedge fund (though that helps) or be a genius daytrader. Financial success comes from having the right skills and combining them into the right processes that will lead to the goal you wish to attain. Among the skills required to achieve financial success are some that are also good skills to have in life and will serve you well outside financial matters. These five are what you might call “double duty” skills that work in more than one context.
One of the big excuses investment professionals hear from customers is that they just don’t have time to learn about investing. If that’s you, welcome to permanent financial mediocrity. Science tells us that to master a skill you’ll need to practice regularly for roughly 10 years. The good news is you can learn the basics of portfolio management and asset allocation in far less time. On the longer term, it does take years of reading, listening and practice to become a really good financial manager and that means mastering your time and making room in your schedule for learning.
This is a tough one, particularly for the daydreamers among us. You can take personal finance classes, meet with a financial advisor, go to investment and money management seminars but if you’re not there mentally, it’s a waste of time and money. In a world increasingly full of nagging electronic interruptions, setting that aside those distractions and really listening has, indeed, become a lost art. When you really start listening to people and engaging with them you’ll discover that it’s frequently necessary to listen a long time to walk away with one or two nuggets of information worth knowing. It’s sort of like prospecting in that way. You have to sift through a lot of sand to find the flecks of gold.
Asking For Help
This is a tough one because asking for help means admitting you have gaps in your knowledge and finding the right person ask; both are difficult hurdles to overcome. The best financial advice comes at a cost and in the form of a Certified Financial Planner. CFPs have a fiduciary duty to act in the best interest of their clients. Most brokers and investment counselors are nothing but glorified salespeople.
This is a tough one because it’s one skill that is painful to learn and there are few textbooks that teach it. Mental discipline is the ability to buy when the world is gripped by panic selling. Being mentally tough means leaving your money in the market when your brain is screaming at you to sell. The deceptive element to mental toughness is it seems easy in theory but it is tremendously difficult in practice.
Perhaps the greatest secret to financial success is also the easiest. Invest small amounts of money over a long period of time. Leave your money in high quality, low fee index funds and keep doing that for 20 or 30 years. If you can do that month after month, year after year, avoiding the temptation to withdraw money for this or that, you’ll be rich. Maybe not private jet, house in the Hamptons rich but you’ll be comfortable.
The really good news here is that, while these skills can be difficult to master, in the end the effort will pay off. Not only will the payoff be financial success but these skills will serve you well at work and other relationships in your life. Learning isn’t always fun and it’s rarely easy but, in this case, there’s a payoff for sticking with the process.