Seven sins stopping your financial success
Seven is a remarkable number. It crops up throughout human history. There are seven days in a week, seven colours in the rainbow and there are (or were) Seven Wonders of the Ancient World. You can watch the Magnificent Seven or sail the seven seas between the seven continents. Or you could commit one of the seven deadly sins.
The seven deadly sins can guide your spiritual health, but they can be adapted to the seven deadly investment sins to your investment wealth. I should say here that I have sinned, both spiritually and investment wise, as I am sure we all have. But there is always hope!
The first sin is one of sloth or not thinking or planning for your financial future. Many people who think that saving is boring don’t bother to set up a savings account or a pension account until it’s far too late. A little time spent planning can help create a more prosperous future.
Pride comes in many forms but most often shows itself in overconfidence in our own abilities and a refusal to take good advice. We tend to ignore all the times our overconfidence got it wrong, and focus only on the area we get right – like someone who’s had a day at the races only boasting about their winning bets.
Envy can lead us down some big financial holes. We fear missing out on the gains that others seem to be making, and so we chase fads or even fraudulent schemes. It is far better in the long term to avoid the outsized returns we read about and accept lower, more realistic returns.
This leads into gluttony. When we chase fads it often lead to us feasting on one particular area of the market and we lose sight of the need for diversification. This is particularly ironic as diversification is the only free meal in finance that gluttons can feast on.
Wrath is what we feel when we lose money. We know that markets go down as well as up, but there is a temptation to blame our portfolio losses on someone else and many wrathful investors often sell their investment after a drop and miss out on the rebound.
Greed is the desire to possess more than you need. Greed while investing can lead us to abandoning our financial plans. A carefully constructed plan should be robust through the ups and the downs of the market, and enable us to live the life we want. But greed sometimes leads us to chase higher returns, and take more risk – putting the whole plan in peril.
The final sin is lust, not the carnal kind, but the pure love of money which makes us forget about other things that we do actually value in our day-to-day lives. For example, we should also incorporate into our plans things like ESG factors or charitable giving; very long-term investments. These things are now easy to incorporate into your thinking when receiving financial advice.
If you are religious you can confess your sins and seek redemption. This is not the case for the investment world. Your investment mistakes will be a permanent stain on your financials hereafter. We all are guilty of committing investment sins, so be sure to seek regular and sound advice which will help keep you on the straight and narrow path to financial happiness – maybe even leading you to seventh heaven.