Everything Is Relative – A Winning Mindset

I’d like to share an interesting personal anecdote that happened a month ago. My husband and I were at the notary’s office to finalise the sale and hand over keys of our house to the new owners. By way of small talk while waiting for the notary, the buyers casually asked why we decided to sell the house.

“Oh, we wanted something smaller, easier to maintain.” The truth and nothing but the truth.

“Well, we too!” the buyers beamed and nodded in unison and understanding, just as the notary stepped into the room.

The incident started me pondering about the saying that ‘Everything is relative’.

For us, living in a 3,000 square feet historical house with a cellar dating back to 1585 became a burden once the novelty of living in a national monument wore off. It was bought as part of a mixed development together with a shop, a small office and a loft with its own garage in the centre of one of the oldest cities in Holland.

We were living in the big house while renting out the shop, office and loft, earning my favourite form of passive income and much in line with the strategy to buy only assets and to deploy OPM where plausible. Investment wise, it worked out very well. Lifestyle wise, it was simply too big for the 2 of us.

The buyers, on the other hand, were moving from a 5,000 square feet house with 6 bedrooms and a double garage sitting on 13,000 square feet of land.

Both parties were downsizing except that what one party was downsizing from was what the other party was downsizing to. See how perspective changes how things are looked at?

This same relativity concept can be applied to investment, especially in managing a retirement portfolio, where one should be focusing on other more pleasurable aspects in life than spending hours seeking the best investment returns. 

For example, you would already be one-up by investing in a REIT or a proven ETF earning 2-4% in return instead of leaving money in the bank earning paltry interest, or worse, paying out negative interest which is what is happening here in Europe.

Compared to putting in a lot of time, effort and assuming a lot more risk for the best yield – which by the way, is NOT the best stock selection criteria – just taking an average position that is ‘better’ than where you were is sometimes good enough. You would be earning returns rather than waiting for the perfect stocks.

Many people wait to start investing for retirement as they want to accumulate more savings or wait for better moment to enter the market. While procrastinating, they lose out. And wait a minute, better than what? 

Executing one’s maiden investment after accumulating some level of investment proficiency already puts one in a better position simply because of having kickstarted the investment journey. Be wary of being caught in the classic syndrome of ‘ready, aim, aim, aim…’ and never firing. While prudent, it leads to wasting of time and opportunity costs. Firing takes courage and commitment.

Intent is good but it is action that makes all the difference.

Moreover, the benefits of taking prompt actions are multi-fold:

• • Indepth learning comes from doing, which is why the adage ‘learn by doing’. 
  • Preferences will be uncovered sooner so a change of course or adaptation can be made. For example, one can switch to buy-and-hold strategy instead of frequent trading if the time and effort of the latter does not align with one’s capacity or liking. 
  • Feel-good effect and confidence, validating and reinforcing the original intent
  • Making small improvements on frequent basis often snowballs to produce huge impact.

Beyond investment, adopting this ‘everything is relative’ mindset in one’s approach to life itself can bring about transformative changes too. 

Take for example the goal of attaining a healthier lifestyle. Setting aside an hour everyday for exercise is difficult for most people due to competing priorities and interests. Much easier to incorporate exercise into daily routine by taking the stairs instead of the lift, walking to the supermarket or other errands instead of driving, 15mins of exercise at home upon waking up instead of having to dress up and go to the gym for an hour of workout.

Small baby steps, a little better everyday over many areas of life can lead to quantum improvement. As is the case of investing $100 a month in an average performing broad-based index fund over 30-40 years, which will allow one to retire very decently. 

Values, goals and benchmarks are different and subjective, depending on personal situation, timeline and social circumstance. What is a good achievement for one may not be good enough for another. 

By adopting the mindset that ‘everything is relative’, you change the competitive landscape to benchmark against yourself, which is what truly matters in the end.

So instead of comparing with others and accepting their yardstick as goals, start measuring against your current self, situation and goals instead. Be it financial situation, retirement planning, physical or spiritual health. Set the goal to be better tomorrow than today, make small changes, take little steps.

Life is a journey and if you conscientiously make sure that the next step improves on the last, you will end up far better than where you started.

It’s not about being the best. It’s about being better than you were yesterday.    ~ Unknown.

 

Be better,

Savvy Maverick

 

(Main image: De Wandelaars, Doesburg)

Disclaimer: The views expressed here are drawn from my own experience and do not constitute financial advise in any way whatsoever. Nothing published here constitutes an investment recommendation, nor should any data or content be relied upon for any investment activities. It is strongly recommended that independent and thorough research is undertaken before making any financial decisions, including consulting a qualified professional.