Firstly, I have to warn you that this newsletter diverges from the traditional financial topics that I usually write about. My advice is to read this newsletter with an open mind and be prepared for something different.<\/p>\n
I had the pleasure of recently seeing Shawn Achor, a Harvard-trained researcher and an expert in happiness and human potential, speak at a conference in Istanbul, Turkey. The excellent presentation got me thinking about people’s level of happiness and its effect on their financial management success (you can watch a condensed 12-minute presentation here).<\/p>\n
Let me start by sharing some of the notes I made from Shawn’s presentation and then look at some of the practical things you can do to master the psychology of happy investing.<\/p>\n
Most people are not average \u2013 average is just a statistical measure \u2013 it\u2019s not relevant. If you study the average you miss out on learning. Best to study the above average.
\nIt\u2019s not reality that changes us, it\u2019s the lens that we view the world that changes us. What you focus on is your reality. If we know everything about your external world, we can only predict 10% of your happiness. 90% of your happiness is how you process that information. Learn how to control your mind and focus, then you can only focus on the positive.
\nSchool grades do not predict success. In fact, studies suggest that a roll of dice is 2% more likely to predict success.
\nIf we know a child\u2019s IQ we can only predict one third of success \u2013 so intelligence has little to do with it.
\nThere are three things that determine success\/happiness: 1) Optimism \u2013 belief that behaviour matters and you can alter the outcome 2) Strong social connection 3) View stress as a good challenge \u2013 not a negative thing.
\nBe careful because negative patterns train your brain. E.g. If you always look for mistakes at work (e.g. such as an auditor does) you\u2019ll look for mistakes in personal life.
\nHappiness is a choice. What you attend to first is your reality.
\nHappiness spreads. The best way to change someone is to change yourself.
\nHappiness is a work ethic \u2013 it takes effort.<\/p>\n
So what does this have to do with investing and managing money?
\nIf happy people are more successful in life then it makes sense that happy people will also be better investors.<\/p>\n
If you are happy you look for (focus on) the good news. This means you\u2019ll see opportunities that others may not. Conversely, unhappy people look for the bad news to validate their feelings. What are you focusing on?
\nHappy people are more likely to be optimistic about the future meaning that they will be less susceptible to selling investments just because of perceived volatility. If your investment is of sound quality then you should focus on long term performance, not short term volatility.
\nI believe that positive people exude positive energy and that positive energy attracts positive outcomes.<\/p>\n
So how do you make yourself happy?
\nShawn offered a few exercises that you can do daily only \u2013 don\u2019t try and do all of them at once \u2013 start by doing one of them:<\/p>\n
3 gratitude\u2019s \u2013 each morning write down and say out loud 3 things you are grateful for
\nThe doubler \u2013 think about one meaningful experience and write it down and think about it and visualise it
\nThe fun fifteen \u2013 15 minutes of exercise
\nMeditation \u2013 start with one minute of meditation and do more gradually
\nConscious act of kindness \u2013 send an email to someone in your social network thanking them for the contribution they have made to your life.
\nUndertake one of these for 3 minutes a day for 21 days and that is all that is required to rewire your brain.<\/p>\n
Of course this idea applies to many things in life \u2013 not just your finances. Happy investing!<\/p>\n
I\u2019d love to hear your comments…<\/p>\n ","protected":false},"excerpt":{"rendered":"
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