The Enduring Value of a Goals Based Approach

September 21, 2020

Last night, as I read a bedtime story to my kids, I noticed within it a particularly grown-up lesson. It told the story of two large stones sitting on the side of a hill, perfectly content with their view of the valley below. One day a bird comes along, and the stones ask the bird, “What’s on the other side of the hill?” The bird tells them of the beautiful, expansive mountain views and grand cities and castles, and the stones become very sad. Years later, a mouse comes along, and when they ask the mouse the same question, he grumbles that there’s nothing but grass and sticks and mud on the other side of the hill. At this, the two stones become very happy once again.
In centuries past, great thinkers have expressed similar sentiments:

“Comparison is the thief of joy” – Theodore Roosevelt

“The perfect is the enemy of the good” – Voltaire

Some people make financial decisions with a goal of “MORE!” which leads them down a path of performance chasing, market timing, and all sorts of other bad behavior. Others have the mindset of “More than my neighbor!“, evoking a constant state of comparison, fear of missing out, and over-analyzing.

Successful planning and investing are not the goal.

They are the means to the goal. I don’t invest because I want to be the best investor. I don’t even invest because I hope it will make me wealthy. I invest because one day I’d like to trade coffee at my desk for coffee on a balcony overlooking the Swiss Alps. (My wife might substitute “Swiss Alps” for “white sandy beach”. We’ll see.)

When you invest and plan around the life goals that are and have always been most important to you, it becomes easier to stick with the process that makes those goals achievable. Do you need to own the highest performing tech stock each year? Or do you need a portfolio that can fund your retirement expenses and allow you to sleep at night? Want to spend your time comparing your returns to every benchmark on Wall Street? Maybe you’d rather map out your next family road trip?

In the end, which of these makes your plan a true success?

Montgomery Gossen had some interesting thoughts on this in his blog, “Are You a Goals-Based Investor?”. To find out more about how we help clients plan for the life goals most important to them, visit our Viewpoint Planning page.