Ignore the all too familiar in financial planning

Familiarity is a foe to your finances. It keeps you fixed where you are, giving you a false sense of security and comfort. That same type of comfort found in the faces of your regular fellow commuters or the not-so-strange neighbours you greet daily in the lift.

When in fact, the only thing you share is the same schedule.

Here are the five friendly faces of familiarity that are running rings around your finances and what to do about them.

Blocking your view

It stops you from seeing that everything is changing, all the time. You fail to value the moving nature of markets, industries, politics and taxation laws. You made a decision, to you that’s final. The idea of constantly reviewing is exhausting and uncomfortable.

Investing is a process not a destination. Achieving your long term goal is your reward for good decision-making. It’s like managing your health. Your financial adviser should be encouraging you to stay on top of your money health.

Better the devil you know …

Now, that’s a familiar saying. You know that devil well. He stops you from getting what you want. Keeping you fearing, doubting and stuck in a rut.

He makes you overvalue what you know. Immobilising you so you can resist the discomfort of change. You can’t see that he’s part of the problem, causing you to fear. Unless you are a financial expert, you are dealing with a lot you that don’t know or don’t understand.

The unknown will always be more uncomfortable than what you know. Accept it. Focus on keeping a curious mindset.

Take responsibility for your research, ask questions and aim to learn to understand. You will be surprised at how much more enjoyable it becomes.

Low risk, no expectations

This makes your life easy. You don’t need to consider anything intangible, that’s like having Facebook friends you have never met. Real friends are what you are about.

So you invested in property. You can keep your risk to a minimum and manage your expectation. It might not be exciting but at least you manage to limit any damage.

The problem with this is that risk has a funny way of creeping up on you when you least expect it. Everyone thought they were safe until the crash of 2009.

When your range is too narrow, you put yourself at a higher risk. Broaden your scope and consider all types of tangible and intangible opportunities.

Only because you can’t hold it doesn’t mean it’s a high risk. Alphabet, Amazon, Facebook, Alibaba and Baidu are now household names which have proven a consistently solid return to investors since 1999.

Thinking the worst

You were taught to plan for the worst and hope for the best. You believe it’s served you well in life. When it comes to money, this is like the naysayer friend who tells you not to bother. They tease you with junk food when you want encouragement to eat healthy.

Planning for the worst stops you from focusing on getting what you want. It’s like moving forward but driving in reverse, facing the wrong way. It takes a lot of effort and concentration. Focusing on everything that can go wrong is exhausting.

Once you turn around and face forward, it’s much easier to navigate the twists and turns with clarity. You see where you are going and what is in your way. You know when to say no to anything that will stop you achieving your goals.

It’s inherited

Your parents raised you well with their beliefs and values. They taught you all they know about the lessons they learnt in life. You respect that. They made decisions based on their experiences.

Crises have happened, new laws have come into force. As Bob Dylan put it, “The times they are a changing”. What worked for them in a different place, at a different time may not be what is best for you.

Consider doing what they did, not what they say. Move on from their lessons and learn how to make good decisions for yourself. Like teaching them how to use the latest smartphone, you staying up to date will end up benefiting the whole family.

Change is getting faster. Familiarity is the enemy of change, stopping you from adopting new ideas and benefiting from good opportunities. While due diligence is always required, learn to recognise the other side of these familiar faces.

Rania Laing is Managing Partner of Your Neuro Coach. Rebecca Ellis is the Managing Partner of Pomona Wealth.