Charlie Munger, Warren Buffet’s longtime business partner, has said, “A lot of success in life comes from knowing what you want to avoid: early death, bad marriage, etc.” Charlie was talking about a problem solving technique called “inversion.” We use the term “anti-goals.” Either way, focusing on what you want to avoid is a very powerful tool. Let’s explore some examples of anti-goals for your investment life.
You probably already have a long list of lofty goals, but thinking only about what you want to achieve leaves you open to many negative outcomes. For instance, if you focus every waking moment on climbing higher and higher, you may end up lonely, exhausted, unhealthy and unhappy. That is not a win.
To get started with anti-goals ask yourself, “What actions or situations cause the most damage for me and how can I avoid them?” You may find that attacking your anti-goals head on will make your days consistently more enjoyable and productive.
If I don’t want to…
1. Worry about my net worth
2. See an investment to go to zero
3. Worry about my ability to maintain retirement spending
4. Be unaware when I’m spending more than I make or can afford
5. Spend all of my time researching and managing my investments
6. Feel financially inadequate
7. Be ignorant about the markets or their risks
…I should pursue these anti-goals:
1. Avoid checking my account balances more than once per week
2. Keep concentrated single business investments to a reasonable dollar amount
3. Don’t do all of the investment and cashflow work on my own – ask my investment advisor to run a personalized scenario analysis
4. Don’t leave expenses unaccounted for – use expense tracking software like Quickbooks
5. Spend no more than one hour per week on personal financial matters. Rely on my advisor, accountant, estate lawyer – that’s what they’re there for.
6. Avoid personal financial comparisons about vacations, boats, cars or homes. There is always someone out there with more than me.
7. Ask my advisor to walk me through the risks and factors that affect my investments for my own education
This anti-goal approach to investing not only eliminates unproductive habits and thinking; it allows you to focus on things that really matter. For instance, when you spend less time checking your investment results and micromanaging your portfolio, you’ll have more time and energy for your family, friends, career and hobbies.
What we suggest is that you balance the pursuit of those positive outcomes with intentional efforts to avoid negative scenarios. We’re not suggesting you stop setting and pursuing goals for yourself and your family. Aside from the examples above, the next step is to make a list of situations you want to prevent. If you need a sounding board, we’re here to help.
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