Plan Smarter. Live Better.

by Kevin Kroskey, CFP®, MBA

Our lives are the cumulative result of the decisions we make every day. Just as in investing, the power of these decisions compounds over time. That’s why it’s so important to find a decision-making process that works for you — both in life and in your financial life.

The life equivalent of compound growth is wisdom. It’s preferable to have the compounding effect grow into wisdom rather than a reinforcing mechanism to ongoing subpar decisions. To build wisdom, this involves acknowledging:

Uncertainty can create both stress and opportunity.

Planning for what might happen is smarter rather than trying to predict what will happen.

Focus on your decision-making process, not just outcomes.

Be flexible and adaptable, not rigid.


Kudos to you! By living in the U.S., you already won the geographic lottery and reduced uncertainty compared to being in a less developed or less capitalistic country. Yet, despite this, it may sometimes seem difficult to be an optimist. Much of what happens in life is unpredictable. But you can live an extraordinary life without knowing what’s going to happen. Same, too, in your financial life.

Does the news impact the markets? Is the news predictable? My high school algebra teacher taught me this transitive property means that since the news is not predictable and it does impact the markets, the markets are therefore unpredictable too. Despite this, most act differently in their investing behaviors and suffer a poor decision-making process, tilting probabilities unfavorably to an undesirable outcome.

You can have a good investment experience without predicting what the market is going to do. Rather, smartly choose to be an owner in many companies and believe in the ingenuity of people to solve problems, improving companies and returns to shareholders. Or perhaps you choose to be a lender to banks, governments, or companies and derive more of your return through income. Either way, you expect a return over cash for this additional risk you incur. It’s precisely because of the uncertainty you can expect this excess return. It’s a feature and not a bug.

Yet, a wise investor knows they should only expect to get compensated for the non-diversifiable risk of stock or bond markets. There is no excess return to be expected in choosing one or a small basket of specific stocks or bonds. This just adds extra risk, which is more akin to speculation than investing.

Planning & Deciding

Think about all the unexpected turns your life has taken and the possibilities that resulted. You couldn’t have predicted the outcomes of decisions you made. Rather, you were reflective in your thinking or intuitive in gauging the risks and opportunities being presented to you. This is an early form of a planning process.

The same is true of financial planning and investing. You can’t predict, but planning is prudent. By having a sound financial planning process and a plan that reflects the lifestyle you want to protect, you can have known responses to various forms of uncertainty – good or bad. If uncertainties occur, you’re more likely to respond appropriately and potentially turn risk into an opportunity.

People shrink away from investing because of uncertainty. While you can’t control markets, you can control how much risk you take. You can control your costs. You can control whether to have a competent and trustworthy advisor in your corner for help making financial decisions.

Live Life Flexibly

While it’s important to have a plan, in both life and investing, the road will be easier if you cultivate flexibility and be adaptable. There are almost always tradeoffs or optionality related to your decision-making. Think about someone you know who’s successfully navigated major life challenges. Were they rigid, or were they nimbler?

It’s not the decisions you make, but how you make decisions. Investing and financial planning, like life, are ongoing processes. If you’ve followed a solid plan, you’ve put yourself in the best position to achieve success. Don’t ruin your state of mind by obsessing after the fact with 20/20 hindsight.

A good first step on this journey is having an honest conversation with yourself or your spouse about what sort of life you desire. A great advisor can be this thinking partner too who can then help apply sound decision-making processes to align your financial life to support your desired one.

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Kevin Kroskey, CFP®, MBA

Sponsored by

True Wealth Design

Kevin Kroskey, CFP®, MBA is the Founder of True Wealth Design, a wealth management firm with deep expertise in retirement, tax, and investment planning, helping successful families and individuals Plan Smarter and Live BetterTM

Opinions and claims expressed above are those of the author and do not necessarily reflect those of ScripType Publishing.