Mother knows best
Motherly love goes a long way, and motherly advice apparently is more important than one might think. With Mother’s Day recently being celebrated, as Americans armed themselves with bouquets of flowers, yummy chocolates and tear-jerking greeting cards, one thing that may not have been on the top of their list of things to consider was mom’s money advice.
A poll commissioned by CreditCards.com found adults no longer consider mom their strongest financial influence. Instead, Americans say they rely more on themselves when it comes to developing financial habits and money management skills.
Young adults are the exception, however. Millennials say mom plays the most significant financial teaching role, with 31 percent of respondents between the ages of 18 to 29 saying she is their biggest financial influence.
Which is to say that mom’s influence lessens as we age. This may seem like an obvious statement, since we grow more independent as we get older, certainly. But Mother often bestows upon us some jewels of knowledge that can be translated into investing advice. So to honor mom for Mother’s Day, here are some maternal wisdoms that most of us have at one point heard, and how it translates into investing.
God gave you a brain. Use it!
Here’s something I’m sure we’ve all heard from mom. Don’t forget your common sense. In financial terms, that means that you should never forget that a higher return means a greater volatility and greater risk. So when you hear of a magical investment opportunity, don’t forget what mom told you.
If it was a snake it would’ve bitten you.
Remember running around the back yard screaming “I can’t find it ANYWHERE!” only for mom to find the exact thing you were looking for, right in front of your eyes. In financial markets this translates as follows: the obvious, sensible investment, is often the one that is right in front of you. Why go on some pioneering search for some nugget of a unicorn stock that doesn’t exist?
You won’t be happy until you break it, will you?
As kids we could be quite reckless with new toys. And the motherly advice was to take care of your possessions, lest you break them. The investment corollary here is that we go to much effort to build up a carefully strategic portfolio, and then mess it all up by chasing butterflies with every gimmicky mutual fund that comes along. The lesson: take care of your investments.
Eat your vegetables!
The investment equivalent of eating your veggies, would be taking the time to do the mundane and relatively uninteresting tasks of rebalancing your portfolio, and the small yet crucial things that need doing for the health of your investments.
If Johnny jumped off a bridge, would you do it too?
The mob is an infectious beast. This piece of motherly advice is really a jewel. Don’t go following the lemmings off the cliff just because there’s buzz around some hot new stock or investment opportunity. Stay the course with your strategic, sound and sensible investments, and they will perform over time.
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