emotions inventory. An emotions inventory is similar to a physical inventory
of goods in a shop or investments in a portfolio. It is done for the same
purpose as well. Goods that are defective must be discovered and discarded;
investments that have no future must be liquidated. Emotions that
prevent investment compatibility must be recognized and isolated to make
room in the psyche for those that are functional. Thereafter you will be
investing in your comfort zone.
This simple process has worked for me, an ordinary investor, and it will
work for most of you. I do not claim any high level of emotional maturity or
spiritual development. No one who knows me would describe me as a saint
or a guru. I am not a trained therapist. I do not have an MBA. I am not a
Certified Financial Planner, and I am not a Chartered Financial Analyst.
After 21 years of living off my investments and taking regular investment
emotional inventories, I do know which investments work best with my
personality and which investments irritate me or keep me awake at night.
By staying in my comfort zone, investing is fun for me. It will be fun for you
too, though you may not see that yet.
The misery of repeated, painful investment mistakes will be over and
creativity and joy will grow in your life.
Michael and Susan are typical of investors who need to take an inventory.
They know something is not working in their investment lives. As yet,
they cannot pin down the nature of the problem or the solution. Though
many of their friends and co-workers are aware of Michael and Susan’s
specific character flaws, Michael and Susan themselves are unaware. A
weekend working through the exercises in Chapter 8 will change their lives.
Once they find their comfort zone, other aspects of their life will improve as
well. Their children will be integrated into their investment life. Their investment
life will improve their marriage rather than be a source of division.
Self-acceptance, not self-improvement
Comfort zone investing does not mean you become a flawless investor or
a spiritual giant. For most people, striving for financial maturity is a process
of self-discovery and self-acceptance, not a process of self-improvement.
To achieve serenity in investing, once you know how you relate to different
investments, you do not have to change who you are; you simply
need to change your investments to fit you. Often in marriage or work
relationships, you must change yourself if you are to be happy, because
your spouse or boss is not about to change. Changing yourself is much more
difficult and painful than changing your investments.
Changing investments is not, however, entirely cost free. Switching from
stocks to real estate, for example, incurs taxes, commissions, closing fees,
research, and assessment hours, as well as other monetary, time, and effort
costs. There are social costs as well. You may have to reach outside office
norms to find what works for you. If you are a real estate guy and the firm
only offers 401(k)s with no REIT option and lots of free company stock,
you might have to explain to your colleagues why you put nothing in the plan
and spend weekends driving around looking at shopping centers.
Read More : The investment emotions inventory
