Focus on What You Can Control

“Happiness and freedom begin with a clear understanding of one principle. Some things are within your control. And some things are not.” – Epictetus

Despite what most financial media will tell you, there is really only one skill required to become a successful, long–term investor: the ability to focus on what you can control. And while that might sound easy enough, consistently putting this principle into practice over a lifetime is one of the most difficult challenges any investor will face.

The deck is stacked against us – the list of things we can control is short. Meanwhile, the list of things we can’t control includes, well, just about everything! The temptation of quick gains and the anxiety of market volatility often distract even the most disciplined investors from their long-term financial goals. Here, we identify the short-list of things an individual investor can control, as well as exploring a handful of strategies that can help to keep us on track.

What Can I Control?

Successful investing starts with focusing on actionable elements:

How much am I saving?
What is my time horizon? (i.e., how long until I will I need these funds?)
What are my expenses?
Am I investing tax-efficiently?
What is my investment allocation?

By optimizing how much you save and minimizing your costs, you lay a strong foundation for compounding growth over time. Additionally, a thoughtful allocation of assets across various classes (stocks, bonds, and other alternative investments) helps manage risk while keeping your long-term objectives on track.

Accepting Our Limitations

Despite all the data and technology that permeates our modern world, at the end of the day we are still just human beings - making decisions with human emotions and human brains. No matter who we are or where we come from, we all come with our own set of psychological barriers that can disrupt rational investment decisions. Behavioral biases, such as recency bias (where recent events are weighed more heavily than historical data), and confirmation bias (the tendency to seek information that confirms pre-existing beliefs), can distort investor perceptions and lead to decisions that don’t align with our most important goals. However, by making ourselves aware of these limitations, we take the first step necessary to overcome them.

Strategies for Maintaining Focus

Define Clear Investment Objectives: Start with well-defined, realistic goals. Whether you aim for retirement security, educational funding, or another financial goal, having specific targets can help guide your investment decisions away from market noise and toward achieving your objectives.
Develop a Strategic Investment Plan: A strong investment plan outlines how you intend to reach your goals, detailing the investment vehicles you’ll use, how you will allocate your assets, and how you will track your progress. This plan acts as your north star, helping you navigate through market fluctuations and maintain focus on your most important goals.
Regularly Review and Rebalance: Keeping your portfolio aligned with your investment goals is essential. As markets shift, so might your asset allocation. Regular reviews and rebalancing are necessary to maintain your risk profile and stay on course towards your individual financial targets.
Practice Patience and Persistence: Patience is vital in investing. Short-term market conditions can be unpredictable, and investments may not always perform as expected. Staying the course, despite these fluctuations, is key to achieving long-term investment success.
Commit to a Lifetime of Learning: An informed investor is a confident investor. Continuously expanding your understanding of financial markets and investment strategies empowers you to make better decisions and keep your focus where it belongs.

At Lee Stoerzinger Wealth Management, our goal is to work closely alongside you in implementing this disciplined and focused approach to investing. By singling out the key elements within your control, you lay the foundation for a truly resilient plan, tailored to meet your unique financial goals. What’s more, this is not just a strategy for financial growth, but also a strategy for peace of mind – knowing that your investment decisions are based on sound principles and designed to withstand all the highs and lows of markets (and the ups and downs of life). Investing, like life, is a marathon not a sprint. And by focusing on what you can control, you put yourself in a position to win.

Investing involves risk. No investment strategy can guarantee positive results. Loss, including loss of principal, may occur. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results. Diversification is an investment strategy that can help manage risk within a portfolio, but it does not guarantee profits or protect against loss in declining markets.

This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. (C) Twenty Over Ten