Why not being bold enough can be the biggest block to your long-term financial success
It’s natural to have regrets.
In my experience, these tend to relate to opportunities missed, or not taking advantage of a certain situation, rather than failing in an attempt to do something.
In other words, you are far more likely to express regret at being too cautious at certain times, rather than being too adventurous.
This can relate to all aspects of your life, from the job you do to how you spend your leisure time. As you would expect, it can also have an effect on planning your financial future.
Being too timid is likely to cost you more than courage
In most cases, it’s likely that the failure to take a particular action through being too defensive has cost you more than being overly impulsive.
Making the effort to do something, even if there’s the potential of failure, is usually a more positive trait than failing to act through the risk of loss or defeat.
Indeed, eventually taking a chance will almost become second nature, which will increase your ongoing chances of success.
You have probably recognised that the most successful people tend to be courageous. There may be people in your own life who seem to be less skilful or educated but succeed through the fact that they are prepared to take chances.
The starting point to being successful is to believe you will be
Any self-help books about personal confidence will tell you that if you believe something can be done, then your mind will start looking for ways to make it possible, rather than acting as an inhibitor.
In this way, having the mindset that something is possible becomes the first important step towards doing it. You’ll be avoiding any previous assumptions you have had that something is impossible and opening your mind to a new way of thinking that makes it more likely that you can do it.
An extension of this is to ensure you are receptive to new ideas and alternative suggestions that you may not have considered before.
Your investment strategy can reflect your positive mindset
When it comes to being braver in your decision making and attitude, an obvious expression of this is how you invest your money.
When you’re saving and investing for your retirement, it’s understandable if you want to adopt a defensive mindset. After all, you’re building a fund to provide the bulk of your income in retirement, with no fixed idea as to how long it’s going to have to last.
The temptation is to play it safe and follow a low-risk investment strategy. But by not succumbing to this, and being willing to take on more risk, you’ll be far more likely to enjoy greater long-term growth and, as a result, have more in your pension fund when you retire.
As the mighty Warren Buffett, once said, “You should be fearful when others are greedy and greedy when others are fearful.”
For example, in a market downturn, it’s easy to want to avoid investing altogether, or even sell at a loss to avoid possibly worse losses. Instead, the more effective course is to buy stocks at a lower price.
Clearly your circumstances are unique to you and your strategy will reflect your plans and aspirations. Furthermore, there needs to be a sensible balance. For example, I’m not suggesting you put all your money into highly speculative stocks, or cryptocurrency.
But being prepared to be more adventurous can pay off in the long run, with a resulting increase in the quality of your life in retirement.
Thinking positively can help you reach objectives you may not have believed possible
As well as being prepared to accept more risk, increased self-belief and a positive “can do” mindset can also have a positive effect on other aspects of planning your financial future.
For example, you may know someone who is retiring early and thought fleetingly about the desirability of doing the same yourself before dismissing it as an unattainable dream.
But rather than playing safe, and simply seeing it as impossible, there’s no harm in actually being bold and seeing if you can. You could find that some simple tweaks to your financial plan now, could see early retirement become a reality.
It may involve you moving outside your comfort zone and perhaps saving more money each month or taking on more risk than perhaps you’re used to. But at times like that, it’s important to trust your financial plan.
You may find that retiring early isn’t actually feasible, but by grasping the nettle and considering the possibility, you could discover that you could go part-time, with a view to stopping work completely a few years later.
So, by being bold and being prepared to at least consider the possibility, you’ve reached an advantageous position that your initial instinct was to dismiss.
It’s important to seek expert advice
One caveat I would add. Before you decide to become more courageous with your financial planning is that it’s important to get expert advice when you are putting your plans together!
Having someone to advise you means that you’ll avoid making mistakes which can sometimes be irreversible and can end up costing you money and potentially jeopardising your financial future.
This doesn’t necessarily mean that you must temper your boldness, but it can ensure that you’re doing the right thing and that you stay on track to achieve your financial goals.
Get in touch
If reading this has prompted you to think about how you approach your own financial planning, please get in touch.
You can call me on 07769 156 250.
Please note
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.