Why Money Is A Dangerous Measure Of Success
And what to measure instead
By Finnian Kelly
You’ll know that the coronavirus pandemic is having a massive impact on global markets. Markets are plummeting and a lot of people have asked me how I’m dealing with a big drop in my portfolio. Of course, I’m not alone. Plenty of other people are feeling this pain and uncertainty too. We’re also worried about our health, the impact of social distancing, and the far-reaching ways we’re being called to adapt and adjust in this new world.
But if you’re a millennial, this market turmoil can actually become an opportunity.
Keep reading, and I’ll explain why…
Long-term growth over short-term wins
When it comes to investments and wealth creation, millennials have a huge advantage over other people.
It’s our age.
Wealth doesn’t grow in a linear way. Instead, it’s exponential. This means the longer you invest, the better your potential returns. As a millennial, you have potentially decades on other people, which is why you should be investing for the long-term.
As a result, unless you need the money in your portfolio right now, you’ve only lost wealth on paper.
Remember, history tells us that the markets will go up. We’ve seen this trend after every other crash. You could say we’ve been lucky over the past 11 years because we’ve seen a lot of growth.
Now the markets are in a downward trend, and that in itself is predictable – because the markets always go up and down.
This mindset and investor psychology have kept me calmer in these current times. Sure, I’m not as wealthy on paper as I was a few weeks ago, BUT I can also see the opportunity.
We’re in a bear market right now. [This means stocks are in decline and are likely to continue in a downward trend.] But if you know how to invest in a bear market, you can create a lot of wealth.
It’s why I’m confident some people will come out of this crisis financially stronger than they entered it.
In a bear market, there’s an opportunity to invest in high-quality businesses at discount prices. Remember the short term stock price isn’t determined by the book value of a company. Instead, it’s decided by investor confidence. When people get fearful and sell [which is what’s happening now], the price drops. But that doesn’t mean the company itself is failing, just market confidence.
The challenge with a bear market is you don’t know the final outcome. The reality is there are a lot of companies that are going to fail as a result of this current crisis.
To create wealth in a bear market, you need to make the right investments when stocks are at the bottom. Then you need to hold your nerve through the uncertainty. If you do this successfully, it’s possible to accelerate your wealth creation at a time like this.
In fact, if you take the right [guided] action now, you can kick-start your Financial Happiness on a scale that would not have been possible without this market tumble.
Respond to the situation NOW
My calm approach doesn’t mean I’m not doing anything different.
Right now, I’m taking PRACTICAL and POSITIVE steps to strengthen my financial situation. I’m using this opportunity to extend my financial peace of mind [which is one of the pillars of Financial Happiness.]
For example, I’ve reviewed my expenses, and I’ve been cutting out any unnecessary costs and expenses.
I’ve chosen to be frugal and I recommend you do too.
Use this crisis as an opportunity to practice intentional spending. Shine the light on your habits and get crystal clear on where you’re spending. Review all your subscriptions and memberships and assess if you really need them.
Cutting out unnecessary costs and adding those savings to your Get Out Of Jail account is a simple way to consolidate the financial security you already have.
But there’s an even deeper reason why I’m able to stay calm…
Focus on the right metrics
Have you noticed how society loves to assess people’s success on the size of their bank balance?
Financial wealth is a very easy metric to measure. It’s visible too. The big house, the posh car, the expensive holidays – when we see someone living this kind of lifestyle, we assume they’re wealthy!
But just because we like to measure success in this way, doesn’t mean it’s not dangerous.
People who’ve built their self-esteem on the size of their asset portfolio alone, are going to feel pretty rubbish right now.
I know how this feels because I’ve been there myself.
In the past, I did judge my personal value on the size of my net worth. As a result, financial losses really hurt and losing money made me feel like a failure.
I don’t feel that way this time because I no longer measure my success by my net worth. Instead, I measure my net wealth.
Here’s what that looks like…
Net worth vs net wealth
Net wealth assesses your success by measuring your entire life.
In addition to your finances, you measure your health, your relationships, your job satisfaction, your contribution, and your spiritual connection etc. too. [In fact, any area of life that’s important to you.]
When you assess life across a range of metrics, you can feel successful – even if your financial status changes dramatically.
So even though my finances aren’t as great as they were a month ago, I still feel incredible.
I’m in good health, I’m fulfilled in my relationships, and I feel empowered knowing I have knowledge and insight that can really help people [like you] during these times.
In short, my assets may be down, but my life is still improving and that’s a really powerful place to be.
I believe you can create the same experience for yourself when you choose to take PRACTICAL and POSITIVE actions. For example:
• How could you bolster your Get Out Of Jail account by reviewing your spending habits?
• If you’re in a position to invest in this bear market, what will you do?
• How could you take this opportunity to improve your health?
• What steps could you take to strengthen your relationships?
• How could you use this current crisis to deepen your spiritual connection?
It’s true that COVID-19 and the resulting fear are both parasites that we need to beat.
But choose to find the opportunities, and you can emerge from this crisis financially happy instead of financially fearful.
Remember, I’m available if you want to have a chat about any of this – especially if you’re curious about investing in a bear market or using this wake-up call to create financial security.
Simply book in for your Financial Happiness Call, and we can get your net wealth growing – even during these times of crisis.
Disclaimer: All information contained within this article is of a general nature. Do not rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.