David Booth on Dealing Thoughtfully with Uncertainty
Transcript
It’s never been more obvious than now that human beings are not clairvoyant. This pandemic is a daily reminder of that. Even though we like to shrink away from uncertainty, dealing with it thoughtfully gives us hope for a better future.
Here are some simple strategies you can apply to create a plan for tomorrow, even though you might not know exactly what may come.
1. Get a long-term strategy you can stick with.
You need a strategy to reach your goals. That’s true in life, work, or relationships. Deciding on a plan should involve looking at the range and likelihood of possible outcomes. Things might turn around, or things might get worse–it’s important to be prepared for both possibilities. Try to make a plan that gets you through the tough times, so you can benefit from the good ones. The key is not to choose a path with more risk than you can tolerate.
Different people are comfortable with different levels of risk. This is one of the reasons I encourage everyone to talk to a financial advisor before investing. Investing is inherently complex. Dealing with that complexity is the job of a professional advisor. They figure out a long-term strategy that considers both your goals and your risk tolerance. If you’re comfortable, it’s easier to stay the course through both good and bad times.
2. Control what you can control.
You can’t control stock and bond markets, and their returns are inherently unpredictable. What you can control is how much you save and how much investment risk you take. You can’t develop a COVID vaccine on your own, but you can control wearing a mask, washing your hands, and social distancing. Every day, focus on the things you can control and work toward the long-term plan you have in place. It’s all about making the best-informed choices for you. This gives you the best chance of winning, whatever winning means for you.
3. Judge yourself by the quality of your decisions.
Even when we focus on controlling what we can control, things outside our control have an impact. What matters is how we respond and the choices we make going forward.
The future is uncertain, but the quality of your decisions doesn’t have to be. When you feel good about the choices you make, even when things don’t work out the way you’d hoped, you have the satisfaction of knowing you did everything you could.
Even though many people instinctively fear it, uncertainty can create opportunity. If there were no uncertainty, there wouldn’t be a premium for investing in risky assets. Dealing with uncertainty thoughtfully gives us hope for a better future.
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