Charlie Munger said: ““It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”
Straight from the mouth of one of the most successful investors of all time. Avoid being stupid = probable success.
TCFP exists to help you avoid future regret by avoiding bad outcomes by avoiding stupidity. The bad outcome we concern ourselves with most is running out of money. Running out of money is a broad concept, depending on your stage of life it will mean different things. For example:
- I am 51 and for me it means putting enough aside as humanly possible for when I am not (or cannot) work.
- If you are 10-15 years younger than me (36-41 years old) you might well have kids and a chunky mortgage. Therefore, “running out of money” might be more focussed on what happens if disaster strikes and reducing debt.
- If you are 10-15 years older than me (61-66 years old) you might well have cut down or stopped work. Therefore, “running out of money” might be more focussed on keeping income levels up and being on top of your expenses.
Avoiding stupidity at one stage makes success in the next stage much easier thereby reducing the chance of a bad outcome and future regret.
This is not rocket science, it is really simple. However, the first stupid thing most people do is believe that they do not do stupid things with their money.
And why does that happen? Because you are busy, it all seems confusing, inertia, it will all be ok in the end etc. These are all the same reasons you use for not looking after other parts of your life – health, work, family, partner, car etc. – until there is a crisis and you need to lean on the help of a professional.
Why wait until then? Why not get ahead of the curve?
Is the decision not to get to grips with your money a smart decision or a stupid one? What long-term advantage are you accruing from this decision not to act?
With every client we meet we see 5 or 6 stupid financial decisions. None of them are complex, most are easily straightened out, all of them lead to a better long-term outcome and the evaporation of future regret.
And the sooner you get on with it the cheaper and less painful it is.
Still think you don’t make stupid decisions?