More people are embracing a minimalist lifestyle every day. At TrueStar Advisors, our 3M podcast and philosophy have long embraced the concept. Let me elaborate briefly before hitting today's key point.
One segment of 3M is Modern Minimalist Methods, which can be summed up with nine words: Own everything you use and use everything you own. Now consider this on from an internal and external viewpoint, and it's not as simple as you might first think.
Those who drag you down have to go. This applies to family, friends, neighbors, relatives, and co-workers. When it comes to relationships, 3M classifies everyone into three categories: Partners, Associates, and Acquaintances. I will not go into detail here, for that, sign up and gain full access to 3M. But know this, Partners are true, faithful, and stick with you in good and bad times. Former partners are just that, former partners. Time is too short and precious to waste on those who waste time. Internal also includes each of us taking honest stock of what we are putting in our minds. As an investment advisor, the best thing I've done in many years is to turn off the mainstream news. And I mean all of it. I am back to my bookmarks of sites that I find useful and the list is far smaller than before. For fifteen minutes each morning, noon, and evening, I'll pause, read, and catch up on ancillary items in my community, state, nation, and the world. Other than that, unless it directly affects my business, it's not my concern. I've also dumped all social media engagements for anything other than for business purposes. The internal reduction of clutter has been life-changing and, as Johnny Nash sang: "I can see clearly now, the rain is gone, I can see all the obstacles in my way. gone are the dark clouds that had me blind, It's gonna be a bright, bright, Sun-Shiny day."
Stupid Causes, Events, and News - Does it affect you? Can you do anything substantial about it? Does it actually make a difference in the grand scheme of things? If not, tune it out. Protesting and raising hell for what purpose? Destroying property of others because you're upset that you didn't get enough of what you thought you were owed? Seeking to change the temperature of the world by flying in your plane to attend a conference on climate change? Stupid is as stupid does because of senseless acts, words, and deeds. Just stop it.
So, let me ask you, how much of your residence do you actually use on a daily basis? How often are you cleaning square feet of space that you haven't used in weeks, months, or years? Do you use it? Does it have more than one purpose? What if it was gone? Is there a sentimental value? The kitchen and closet are good places to pare down. How many cheese graters does one need? Three potato peelers. Silverware for 24 when you've never entertained more than a couple or two at a time. And then those t-shirts. The ones advertising rock bands, banks, restaurants, or fantasy places in the mind of an artist on acid. Yes, those classy rags are exactly what you see on the rich and famous who are out and about. Not. So lean, clean, and be mean about it. Express yourself with class rather than classless tastes of others.
This is a hard one because it applies to both internal and external items; however, let's break it down. A personal attachment means you attributed emotions to a person, place, or thing. Parting with items that have sentimental value is hard but it has to be done from time-to-time. Dig into the bottom of the closet, drawers, and your heart and mind. Get rid of it, them, and the hanger-on that is hanging you up.
Everything I share in this blog applies to investing in one way, shape, or form. For example:
1 - The internal clutter of having investments that you have no idea as to why you bought them, what they are for, or who they work will scramble the brain. With this said, I once met a man who had 87 mutual funds. Why? Because he couldn't say no to the salespeople at the lunch and learn seminars he was fond of attending. He never became a client because he was sentimentally attached to each fund, despite not having a clue about how any of them worked.
2 - There are those who worked for a company and had company stock issued to them in the form of an ESOP and they can't let go. I once had a client who had over 90% of his $2 million portfolio tied to Proctor & Gamble stock. Yes, one single stock. Why? "I retired from them and they were always good to me. Look at my pension and health care. How could I dump them?" I was able to get the client to sell $250,000 before the big drop in 1999. The portfolio dramatically crashed in value, but the $250,000 I had was extremely conservative in allocation, and it was up in value. Was the client grateful? No. Was the client upset with a $500,000 loss in value? No. Instead, I had to terminate the fella because all he could do was complain about the capital gains tax he paid on the $250,000. A sentimental Forrest Gump who was just smart enough to be dangerous and not live long enough to recover fully.
3 - The cop saved the wife from a violent beating by her husband, but she bailed him out of jail. A prospective client was being scammed by an insurance agent who was engaged in a Ponzi scheme. I informed the client who was upset with me for ratting out his buddy. I kid you not. After another discussion, the prospect realized what was being done and wanted her money back. I got her attorney involved, got the ball rolling on litigation, and then dropped a few well-placed dimes. What happened to the prospect. She got nearly all her money back but never trusted me to handle her funds because, and I swear to Zeus this is a factual as it can be: "Well Paul, you did rat out my friend."
Investing based on sentimental value is not only not recommended, it's also plain stupid.
Behavior that is inconsistent with logical economic reasoning is a problem that the majority of American engage in on a daily basis. To reduce the natural personification of investment holdings, hire a true fiduciary-based investment advisor like TrueStar Advisors. Unleash the power of systems, process, and neutral weighting so you can enjoy more time, money, simplicity, freedom, and fun.
The way we do it, it's better, it's simple, and it works.