Financial Health - What Matters Most
Financial health is less about beating the market and more about making better decisions. A secure foundation, mindful investing, and self-awareness matter more than most people realise.
Financial health is often mistaken for investment performance. In practice, a few principles and behaviors matter more.
Security Over Greed
Many tend to focus on “beating the market”, “higher yields”, or some variant that focuses solely on returns. But higher returns almost always come with higher risk. And few recognise the trade-off clearly.
Securing our financial foundation - by having a corpus for emergencies, adequate insurance against uncertain life risks, and planned savings for critical needs - is far more important than chasing the next percentage point of returns.
Mindful Investing
Many believe that the act of saving for a rainy day is sufficient for long-term wealth. Yet, how those savings are invested is just as important as the act of saving itself.
Many high earners leave large sums in cash accounts or low-return assets, often because they lack the time or decision support to invest thoughtfully.
Being mindful about investing - deploying with intent in inflation-beating investments and periodically reviewing quality - is as important as maintaining a strong savings habit.
Know Thy Self
It is said that personal finance is more ‘personal’ than finance.
Each of us has distinctive needs and aspirations in our life. What we seek from life defines us. And we each have a unique tolerance for risk.
Yet, we often ignore our individual personality when we seek and invest in financial products - trying to ‘beat the market’, comparing with ‘benchmarks’ and ‘peers’, or chasing a fear of missing out with the next hot tech IPO.
For that matter, when we are in our 40s and 50s, are we the same as our 20-year-old selves?
Knowing ourselves, where we are in life, what we value, and how much risk we can comfortably bear is critical to avoiding costly mistakes.
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Financial health can seem complex, filled with ratios, complex formulae and heady analytics. But its foundations are simple: build security before seeking returns, invest mindfully, and make decisions that reflect your identity.
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