The Spring holiday guide to investing

Here’s a story about two work colleagues who took separate holidays. One had a ball. The other came home miserable. Their experiences provide valuable lessons about investment.

With spring in bloom, Frances booked a beach house up the coast for a week. Brian opted for six nights of bushwalking in the Grampians. But while Frances returned to work rested and recharged, Brian came back a jibbering wreck.

Being a last-minute kind of guy, Brian had booked a rugged ‘alpine adventure’ on a whim after a tip from a stranger at the pub. The problem is the tight timeframe left him little room to negotiate over price. And the package he chose was not the one the guy had recommended.

While the brochures promised sunlit vistas and balmy spring nights under the stars, it was cold, wet and miserable every day. Brian’s hastily hired gear fell apart, the tent leaked and he soon discovered that he hated bushwalking.

It rained on Frances’ holiday, too. But she hadn’t invested everything in the beach. Anticipating all climates, she’d packed books to catch up on, alongside a painting kit, crossword puzzles and a guide to local galleries and cafes.

Having planned her holiday well ahead, Frances also knew what she wanted from the break. It wasn’t so much the beach; it was the solitude, the quiet and the opportunity to refocus. And she had sought advice from someone who knew her.

In contrast, Brian had no idea what his holiday was about or whether it was right for him. In truth, he was buying somebody else’s experience.

The point of this story is to show you that investing well is like planning a holiday. There will always be things outside your control, like bad markets or lousy weather. But you can mitigate that by preparing well and diversifying.

Not doing it on impulse gives you more flexibility around cost and design. Thinking clearly about what you are trying to achieve lessens the chance that you take silly risks. Getting advice from someone who knows you and your tolerances also helps.

Most of all, the journey and the destination shouldn’t be at each other’s expense. You need a plan, but it also has to be one you can live with. Once you understand all that, your investment experience (and your holidays) will be much less stressful.

Source: Dimensional

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