How many times do we promise our self we are going to lose 30 pounds, exercise regularly, eat healthy, etc, etc, etc. And how many time do we start out great only to lapse back into the same old habits? It sounds so good when we are making the commitment and in our minds eye and heart of hearts we believe this time is different. But, it leads to the age old question: How and why does this keep happening? Psychology and the study of human behavior has answers that in many different themes, but they all seem to lead back to the simple solution of motivation. Are we motivated enough to follow through on our promise and to work daily to achieve the habits necessary to accomplish our goal or desired outcome?
It would seem logical then to say that motivation is the momentum that drives the discipline to develop lasting habits. If we set out to lose 20 pounds and we are committed to walking 3 miles per day as part of achieving the objective, my motivation is to lose weight and therefore I walk. We start out great getting up an hour earlier every morning to put in the three mile walk. But, as time goes on… do we maintain our motivation or does it wane? Set backs come… we are too tired, the weather is bad, too cold, too hot, snowing, raining, and eventually we stop walking all together. There are endless articles and speeches on how to motivate yourself, but the real challenge comes in sustaining motivation. This is the first issue investors/traders have to deal with in achieving their stated objective relative to investing their money.
Put this in perspective of the following goal… I am 40 years old and I want to retire when I am 65 years old with $3000 per month of income. This is a 25 year goal! The odds are your motivation will fall off long before you get near that objective. How do keep yourself motivated to save $300 per month for the next 25 years? Better yet how to do I stay motivated to manage the money year in and year out. If I believe I am going to stay motivated about a goal 25 years into the future, I am only kidding myself. For me personally, the word purpose better defines how to achieve both short and longer term goals especially when it come to my money. What if I define the purpose for investing $300 a month for 25 years is so I can retire and live the lifestyle I want for the remainder of my life. Being motivated is driven by my defined purpose. Investing on purpose is key to getting where you want to be. Purpose in turn helps you develop the habits necessary to obtain your goal. If I put on my calendar the last day of every month to review my retirement portfolio and recalculate the outcome based on the current balance when I can retire the motivation stays fresh. When I have setbacks from the markets moving lower I may want to find ways the next month or two to save more money to help buy more shares in my retirement account. Defining the purpose will create the habits which in turn drives discipline… which accomplishes the goal or the desired outcome.
Recently I have been working on the idea of making $500 per day from my portfolio. This would equate to approximately $120,000 per year. Being that I am not a day-trader, I had to find a way to translate this into my strategy for investing. The purpose behind this endeavor was to make me more disciplined in my active approach to managing money. This drove down to the simple task of managing the emotions involved in making buy and sell decisions in my portfolio. If I could look at the positions and determine if they are achieving the objective/purpose for which I bought them… adding $500 per day of value to my account, I would be on my way to achieving my goal. Without getting into all the boring details of how this can be done, I want to focus on the purpose… maintaining the lifestyle I want without having to go to work every day. I happy to say I am developing better habits that are driving my defined discipline to implement the strategy for investing my money. I am finding a way to spend an hour a day managing the positions to achieve the objective/purpose. If there is a position in the portfolio not achieving the objective it is sold and another added to the portfolio that will achieve the objective. Simple, defined, implementable, trackable and achievable. End result living on purpose!
Three steps for staying on purpose:
First, find your motivation or purpose for investing your money or stated differently… putting your money at risk. Define in terms you understand, believe in, and are willing to commit to daily to achieve the desired outcome. It is YOUR money, it has to be YOUR purpose in order to accomplish YOUR goals.
Second, define your strategy, process and needed habits before you start. Practice, practice and practice some more. Implement your strategy small at first, gain confidence and good habits, then increase the size of your positions as your confidence grows along with your education. Maybe you start with making $50 per day and grow it from there. Whatever it takes to keep you engaged in the process and stay on purpose.
Third, hold yourself accountable daily. That is why I designed the $500 per day goal. It is manageable, measurable, and achievable for me to gain the confidence to keep doing it every day. I am motivated to be accountable to myself and my future as I laid it out and believe in the purpose for implementing the strategy every day.
It is too easy to get caught up in the complexity that is the market. It is equally easy to get distracted in trying to find the BBTS (bigger better trading strategy). If you stop long enough to define what you want, the purpose, a strategy for achieving it, you will develop the disciplined habits it takes to achieve the end objective. Managing my money on purpose helps me to live on purpose, doing and experiencing the lifestyle I want to live. It all starts and ends with investing on purpose to live on purpose.
Dare to Dream!