In today’s fast-paced world, it’s common to make financial decisions on autopilot. However, by incorporating mindfulness into our investing practices, we can bring greater awareness and intentionality to our financial decisions, making more informed choices that lead to long-term success and fulfilment.
What exactly is mindful investing?
It’s more than just stock selection and asset allocation—Mindful investing involves developing a profound understanding of our financial goals, values, and behaviours, and aligning our investment strategies to create coherence in our lives. By cultivating mindfulness in the decision-making process, we can skilfully navigate market fluctuations and life-course changes, manage risks, and remain attuned with our long-term objectives.
Before conceptualizing mindful investing, we need to first understand the concept of mindfulness, and how it relates to investing. Mindfulness, with origins tracing back thousands of years to ancient Buddhist philosophy, is a state of being fully conscious and engaged in the moment, acknowledging thoughts and feelings in a manner unconstrained by preconceived judgments and unhealthy attachment to outcomes. In Christianity it involves a spirit of detachment yet being focused on the simplicity that comes with faith.
When integrated into the world of finance and investing, mindfulness encourages us to approach financial decisions with a mindset free from biases and cognitive distortions that can cloud judgement. This requires a deliberate shift in habitual thinking and approach to investment decisions and financial planning. It causes and demands of us… to listen.
There are two foundational concepts underlying mindful investing. The first is Awareness, which entails fostering a deep consciousness of our financial goals, values, and motivations, as well as the external factors that influence our investment decisions. By dedicating time to reflect and engage in conscious examination of our financial priorities and aspirations, we ensure that our investment strategies align with our personal beliefs, values and objectives.
This awareness, in its purest form, also requires a regular examination of conscience to ensure alignment with the belief systems and values of both the individual and the family.
The second central aspect of mindful investing is Intentionality. This involves making deliberate and purposeful choices regarding resource allocation and other investment decisions, guided by our unique financial circumstances and objectives. Unlike impulsively reacting to market trends or external pressures, mindful investors exercise discernment and consider the long-term implications of their decisions, selecting investments that align with their overarching financial and spiritual goals.
Awareness and intentionally are not mutually exclusive; they are intertwined in a mutually-supportive relationship. True intentionality in investment behaviour requires a present-orientated mindset and heightened awareness of the self, including our goals, values, and circumstances. Think of awareness as the foundational mental mode and perspective that informs our behavioural patterns (intentionality), all within the overall framework of mindfulness, which requires harmony between these two elements.
Practical tips for integrating mindfulness into your financial life
- Practice Awareness: Reflect on financial goals, personal values, and motivation. This introspective process provides a foundation for informed decision-making, ensuring that investment choices resonate with personal aspirations. Listening required.
- Stay Present: When making investment decisions, focus on the here and now. By staying present and focused, you can better navigate the dynamic nature of the financial market, and mitigate against the influence of past experiences and future uncertainties.
- Manage Emotions: Develop emotional resilience to navigate the emotional highs and lows of investing. Experiment with different techniques, such as deep breathing exercises, contemplative prayer and other rituals to manage emotion and maintain a stable perspective.
- Engage with Research: Thoroughly research potential investments and understand associated risks. Arming yourself with knowledge and information, allows one to make more confident and informed decisions grounded in analysis.
- Seek Professional Guidance: Collaborate with a financial advisor who understands your objectives and values, enabling the development of a tailored investment strategy aligned to your unique needs. Articulate your personal goals, values, and circumstances to an advisor, leveraging their investment experience and subject-matter expertise to bridge the gap between mental awareness and intentional investment behaviours.
Incorporating mindfulness into our investing practices allows us to cultivate a greater sense of empowerment and resilience in our financial decision-making, consequentially boosting our long-term success. This transformative approach to achieving your life goals helps you intentionally navigate complex financial terrain with clarity, maintaining alignment to your long term objectives and wellbeing.