Positive Psychology is the science of living a good life. For those of you who have just rolled your eyes, it doesn’t mean we must force ourselves to always think positively. And if it sounds like just another self help book you are right except this one is backed by published research.
Positive psychology focuses on relationships, work, activities and day to day behavior. As we all know even the best of these can be messy. The positive is we do the things that have a positive influence on our life. The trick is to discern between chasing hedonism and feeling good.
How can we become better investors:
- Work is essential to a good life not only because of the income it provides but because it gives us something to do, it gives life some meaning. Since we no longer need to spend the day searching for food, we need to focus that attention on something. Making enough money so that you won’t have to work will not lead to a better life unless it provides an opportunity to do the work you would prefer. How your work effects your investments is by adding the savings from your income to your investments is the best way to increase your wealth. Your work will be your most prosperous investment in more ways that one.
- A good salesperson will tell you relationships are everything in business. Same is true for a good life. The less intentional manipulation in a relationship the better(some level of manipulation is inevitable….we do it unconsciously). When it comes to investing, your relationship with the person who manages your money or gives you advice should be a good one. You should look forward to that monthly or quarterly meeting. You should feel comfortable being able to call them any time you have a question or concern. A sure way to stunt long term investment performance is to hop from money manager to money manager. A great way to enhance performance is trust that a money manager knows what’s best for you….you’ll be more likely to add more money and less likely to sell when markets crash. And feeling comfortable talking to someone about your finances reduces that money stress.
- Don’t chase hedonism. Investing in a hot stock gives us a rush of pleasure, a chemical release of hope. More often than not we end up being disappointed. Investing with meaning is a far better strategy for your long term wealth. Investing in sustainable investments will not offer the immediate rush of excitement, but will provide the means for your goals down the road.
All aspects of a good life cost money, but that doesn’t mean more money means a better life. Research shows that is true up to a certain amount, but not true for more. Where this translation is lost is in our work and spending. Spending more than required usually means working where we would rather not and investing less, leaving us feeling hopeless.
Knowing what you want or what kind of life you want to live is the most useful piece of investment information you can have.