Finance Be comfortable with what you don’t know Boost your financial knowledge They say that knowledge is power. True enough. It’s also confidence. The most basic fear of all is fear of the unknown: where is the market headed? Will rising interest rates impact my mortgage? Will I have enoughmoney for my retirement? How can I leave enough for my kids and grandkids?The more you can eliminate these unknowns, the more peace of mind you’ll have about your finances…the less paralyzed you’ll be about what you should do… and the more confident you will be in your financial decisions. If you’re feeling a distinct lack of confidence about your finances, one of the best things that you can do is to expand your financial knowledge. Read a book about investing strategies – there are certainly plenty of excellent ones to choose from. Tune into a stock market programonce in awhile, and learn about the opportunities that others are uncovering during this time of market turmoil. Listen to a podcast, and find out how others are thinking about what signals to look out for which will tell you that the current bout of market volatility is coming to an end. Read a couple of online articles – or check out previous finance columns from your favourite snowbird magazine – and gain some investment perspective or timeless financial wisdom. Of course, there’s a point at which the quest for knowledge becomes a burden – a point at which the sheer volume of stuff that you can read bogs you down, rather than building you up. This is an important point to keep inmind these days, in which you can literally read, watch or consume investment analysis, financial opinions and economic reports round the clock all year long if you really want to. So, start small. Instead of diving deep, do a little bit each day. You’d be surprised at howmuch more calm, confident and empowered you’ll be feeling in a short time. A followup to the point above. Despite our best efforts to knowmore about what’s going on in the financial world (and why it may be going on), there will always be certain strategies, certain industries, certain markets and certain opportunities that we just don’t know about. Funny enough, being honest about what we don’t know can be as much of a boost to your confidence as our efforts to learn more about them. Even the best investor in the world –Warren Buffett, chair of Berkshire Hathaway – is candid about the limits of what he knows. He calls it his “circle of competence” – the range of financial topics, issues, industries and strategies about which he has tangible, useful knowledge. He’s equally candid about the limits of that knowledge. Here’s what Buffett said about how important it is to understand that circle of competence in his 1996 letter to shareholders: “What an investor needs is the ability to correctly evaluate selected businesses. Note that word ‘selected’: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.” Truly confident people are willing to acknowledge the limits of what they know. They understand that the ultimate goal of investing (and, we would argue, of life itself) is to build that circle of competence, expand it when you can, and “play” within the circle. That is ultimately the difference between wisdom and pride, between confidence and self-doubt. CSANews | FALL 2022 | 33
RkJQdWJsaXNoZXIy MzMzNzMx