Finding Success In A Multitude Of Failures

Thomas A. Edison once said “I have not failed. I've just found 10,000 ways that won't work.” Success can be an elusive little creature. Failure is often more recognizable and when failure is found in financial matters, it can be devastating. Therefore, it behooves you to pay attention to the details and err on the side of caution concerning financial decisions. To say that I am a fiscal conservative is not an understatement, but it wasn’t always that way. In many ways, I have matured in my financial acumen, but mistakes are still made and opportunities are still squandered because, as I said, success can be an elusive little creature.  

Over the years, I have had the pleasure to work with others to create financial strategies focused on building wealth. It is important, no imperative, to develop the right attitude concerning your investments. Part of this attitude is your level of risk tolerance. There are all sorts of online evaluation tools to help you determine how much risk you can tolerate. However, all you really need to ask yourself is “Does the color red bother me?” If you answered no to that question, ask yourself this one. “How long can I stand to look at the color red before I panic?”

The truth of the matter is that if you are invested in the market, you’re likely to experience gains and losses. Seeing red in your portfolio is not a cause for panic. Panicking in the midst of a market move on any given day is one of the “10,000 ways that won’t work.” The best way to reduce your reactionary instinct is to shift your focus from the things that make you anxious to the things that bring you peace. Anxiety is merely a reaction to external stimuli; in particular negative external stimuli. Peace is an internal mechanism that comes from being grounded in your attitude. So how do you become grounded in your attitude towards the things that cause you anxiety?

Here are six ways you can increase your ability to succeed in building wealth even when the market makes you anxious.

First – Set goals: One of the greatest causes of failure, when it comes to finance, is the inability (or unwillingness) to set specific, measurable, attainable, relevant, and time structured goals. Write your goals down using the model I discuss in my book Simple Wealth Building Strategies. Goals need to be predictive and influenceable. That is, if you do what needs to be done, it is predictable that you will achieve what you want to achieve and you will achieve it because you have direct influence over the components of the goal.

Second – Don’t Panic: Remember Geo-Political events will happen. Most of the market’s reaction to geo-political events are based on “what if” instead of “what is.” Remember Brexit? The market dropped 546 points on June 24^th followed by another 215 point drop on the following Monday. A total of 760 points in two days followed by a 700 point gain over the course of the next four days. Including the day before the Brexit vote, the market actually rose 106 points over the span of seven days. The lesson? Don’t panic just because the world does.

Third – Be steadfast: Do not deviate from your plan. Executing your plan is difficult when you turn your focus to the success of others. You worry about your success and not the success someone else is experiencing. When you desire to experience what someone else is experiencing, you lose focus and begin to fail. When you are unable to attain what others have and you turn back to your plan, you will notice that, without regular maintenance, your plan for success is now a plan for disaster.

Fourth – Less is more: This is my wife’s favorite saying. Sometimes the less you do the more impact you have. Your investments do not have to be sophisticated, nor do they have to be large in quantity. Owning a few dividend paying stocks, over a long period of time, can produce substantial growth. Once you have established your portfolio, it should only require a small amount of maintenance. Applying the DRIP philosophy (Dividend Re-Investment Plan), your investments grow on auto-pilot. Owning just a few Dividend Aristocrats can produce healthy results.

Fifth – Know your style: Buffet or Ramsey? Warren Buffet encourages investors to learn to make the right decisions. He said “Diversification is protection against ignorance. It makes little sense if you know what you are doing.” Buffet believes that one only needs to study a few industries in depth to have a more lucrative portfolio. Dave Ramsey encourages diversification through mutual fund purchases. In theory, diversification reduces risk by spreading your investment dollars out over a large number of individual companies held in mutual funds. It is important to know if you enjoy digging deeper into an industry to understand the mechanics of the companies or if you prefer to have mutual fund managers dig for you?

Sixth – Maintain perspective: Building wealth is important, but it is only one aspect of the bigger picture. Learn to keep purpose in perspective. Why are you building wealth? That’s purpose. Faith, family, and finances: that’s perspective. It is not my place to give you either purpose or perspective, but if you have the wrong perspective, your purpose won’t matter. Finances are a means of caring for your family and exercising your faith. If your faith is in your finances, then you have already failed.

When you are able to bury these six ideas deep within your soul, you will find that the internal mechanics of peace will overcome the external stimuli that causes anxiety. Thomas Edison did not become anxious when he discovered yet another way something didn’t work. He just kept moving forward trying different things until he figured out a way to make things work. The biggest idea to always embrace is this. Don’t be afraid of failing. It is alright to fail if only for this one reason. Failure shows the world that you are at least trying.

One of my favorite phrases “Qui audet adipiscitur” (Latin for Who Dares, Wins) is a motto made popular by the British Special Air Service. Daring requires an inner peace in the midst of outer chaos. He who dares not, wins not. You cannot quit and win, you have to engage to win. You can’t be successful unless you learn to measure success in a different way. Remember, when you dare you can say as Thomas A. Edison once said “I have not failed. I’ve just found 10,000 ways that won't work.”