Recently, a brilliant little article popped up over at Five Cent Nickel, outlining the idea that one’s take on long-term investment performance is often a matter of perspective.
I go even further: almost every assumption that you base your money decisions – and even your other life decisions – on is a matter of perspective.
Take me. I was born in the country on the banks of the Mississippi River in a quiet region of the Midwest. I graduated in a high school class of 31 people (several of whom now read The Simple Dollar, apparently). I went to a big university (Iowa State U.) where I graduated in a class of several thousand. I’ve worked for businesses. I’ve worked for governments. I’ve worked for myself. I’m married and have children. After living in a city, I now live on the very periphery of a small town and I dream of living in the country once again.
All of these aspects of my life have shaded my perspective time and time again. Let me walk through some examples.
My childhood taught me it was better to be earnest. To put it simply, I tend towards the serious. I often take people at their word, sometimes even when they’re joking.
My childhood also taught me that not having money doesn’t mean you’re stupid or worthless. Many, many people with substantial money seem to act as though people without money are rubes. That’s simply not the case – there are intelligent, well-intentioned, hard-working people at all levels of financial status.
My educational history taught me that there are many different ways to learn. Not everything about an educational experience can be measured, and a school with tons of opportunities can fail a student just as much as a school with few opportunities. It’s up to the student to be successful – a forward-thinking kid can take advantage of any situation.
My educational history also taught me that tests don’t mean much of anything. I was a National Merit Scholar who proceeded to almost flunk out of college at first because I had no idea whatsoever how to study. I spent my childhood just absorbing whatever interested me, which was great for the SAT and high school but terrible for college. I looked great on the SAT, but in a classroom where I didn’t know the material and didn’t care, I floundered big time.
My work career taught me that stability isn’t everything. If you’re in a stable career, you’re often surrounded by complacent people, which makes it difficult to get things done and exciting projects are hard to come by.
My history with investing pushes me towards being conservative. I’ve seen the dot-com bust and the housing bust. Don’t rely on the stock market for anything you’ll need long term. If you need that balance, it shouldn’t be in stocks.
All of the experiences in my life have gelled together to create my perspective on the world. I tend to think that taking someone at their word is usually the right way to go. I tend to overestimate the reliability of jobs – and sometimes overcompensate for that. I tend to underestimate the reliability of the stock market. I tend to not buy into the whole pressurized SAT/ACT/college application experience that high school seems to be. I tend to, if anything, be biased against people who dress in expensive clothes and drive expensive cars.
My life experience has created my perspective on the world. It pushes me subtly towards conservative investing choices. It pushes me towards being a locavore (eating locally grown foods). It pushes me towards being earnest, serious, and forthright with others much of the time. It pushes me towards chasing my dreams instead of seeking the good-paying stable job.
It’s different than your perspective. Your life has taught you different lessons than mine. The things you choose to apply in your life are different than what I choose to apply, and they get different results.
I can’t provide all the answers. No one can. The best I can do is provide my answers and leave the comments open for others to provide theirs. Out of that, perhaps, you can find the direction you need to grow and move onwards.
Quite often, I get emails from people saying “I love The Simple Dollar. I don’t always agree with what you say, but I read it every day and it makes me think.” or something similar. I’d far rather read that than someone saying “Trent, you’re always right.”
Because I’m not even right in my own life much of the time, and I’m certainly not going to be right in your life, either. All I can do is bring my perspective to the table and hope that, when we share ideas, you bring your perspective, too.
Whenever you read something or hear something that you think is wrong, stop and ask yourself this: why is it wrong? The more often you can come up with a real answer for that, the better off you’ll always be in every aspect of your life, financial or otherwise.
Tell me about it. What aspect of your life has given you a perspective different than mine?