Why investing is all about values

Starting with ‘why’ you do things will help you make better investment decisions.

Summary: It is beneficial to separate values from goals to help with financial decision-making. Money should be the means to achieving goals, not the end, and it becomes easier to think that way when you get clear of values first.    

Key take-out: Investors should go back to square one and first identify their values to make sure their money is going towards the right goals. 

Key beneficiaries: General investors. Category: Investment strategy, superannuation.

We can spend a great deal of time thinking about our money to then forget that money is the means and not the end.

It is the means to achieving our long-term visions. Goals and objectives, when clearly defined, can be the cornerstones of financial success. However, the exercise of defining these can be more powerful, in creating a sense of long-term vision and shorter-term focus.

The idea of establishing a set of goals to guide financial decision-making is certainly not new. Many of us are ready to list off big-ticket items to be achieved by a certain stage or age, like retirement, paying off the mortgage, or a large asset purchase. While these can be great things to aim for, going a little deeper to figure out what is really important can create a more powerful and meaningful framework for greater life satisfaction.

Values vs goals

The benefit of separating our values from our specific goals, and making them the basis of our financial decision-making, is sometimes forgotten. Getting back to square one – the foundation of who we really are and what is truly important to us – is sometimes necessary before you begin to put together the framework.

Rather than thinking about those specific actionable goals in the first instance, consider first the ideals that you value the most – for example, meaningful relationships, family, a sense of freedom or fun, legacy, the ability to give back. The list is potentially endless and can only be defined by you.

Thinking through these values can have a remarkable way of giving you a better ability to prioritise what you really want your life to look like – and your money to do for you.

If a sense of community is something that you value highly, where you choose to live and who you surround yourself with, now and at various stages of life, is an important decision that streams from that value.  

Our life and financial journeys are inextricably linked and our financial goals can sometimes read more like a bucket list. Try focusing on four or five key values and figuring out what stems from there.

Getting on the same page

Sitting down and speaking with your partner about your goals and values, from an individual and joint perspective, can seem unusual as we can quite naturally assume that theirs line up with yours.

Setting aside some time periodically for uninterrupted discussion about visions for the future, based on your values as individuals and as a couple, is probably something that could be of benefit. Having advised clients for over a decade, it is often very insightful and interesting what this discussion can reveal. It is not only a great way to keep yourself and each other accountable, by getting on the same page where it matters, but also prepares you for the prospect of making a trade-off or compromise – “what would it mean if we could not do X or Y?”

Start with ‘why’  

When it comes to your money management, there is no one size fits all approach. What may make sense for someone else may not always make good sense for you.  

From superannuation strategies, to what you elect happen to your assets upon your death, how much complexity or otherwise you adopt, the degree of risks you take, and where and how you invest, all shape a very personal financial roadmap.

When you get clear on your values, you identify the right goals. You then reframe money as not the ends, but the means, to achieving great life satisfaction. While the ‘what’ and the ‘how’ are important, the ‘why’ underpins it all.

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