RPF00147-Alice_Boyes_Interview
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00:00:11.480 | Don't miss out visit la kings comm slash holiday today today on the show. Let's dig into our own
00:00:17.660 | anxiety
00:00:20.180 | especially
00:00:21.460 | Anxiety about investing my guest is a former clinical psychologist
00:00:27.740 | Dr. Alice boys. She's an expert on this subject. In fact, she's written a whole book on it
00:00:32.500 | Welcome to the radical personal finance podcast. My name is Joshua sheets and today is Wednesday, February 4
00:00:54.680 | 2015
00:00:57.620 | You know, we are all thinking
00:00:59.620 | sentient human human beings or at least some of us think we are and that means we come with a whole host of
00:01:06.100 | Advantages and problems maybe even some of us have a few disorders or neuroses and today let's talk about how to
00:01:14.620 | Perhaps improve some of those things
00:01:17.100 | What I think you will most like about today's guest
00:01:24.020 | Well, one of many things you'll like about today's guest is that although she is a former clinical psychologist
00:01:30.140 | She knows what she's doing when it comes to the world of personal finance and financial planning and financial lifestyle design
00:01:36.060 | She's actually as you'll hear at the very beginning and just in about 25 seconds
00:01:40.780 | she is semi sort of semi retired traveling for a moment at a young age and
00:01:46.420 | is
00:01:48.620 | quite the
00:01:50.460 | financial hacker extraordinaire
00:01:53.580 | But she can also teach us a little bit about what to think and how to approach our own thinking process
00:01:59.820 | especially with regard to
00:02:01.940 | investing
00:02:03.300 | enjoy
00:02:05.300 | So, dr. Boyd's welcome to the radical personal finance podcast, I appreciate you being with me today
00:02:09.940 | Hello, I've been looking forward to this since you emailed me as a listener and said hey Joshua
00:02:15.700 | you know, I might be able to provide some input on the
00:02:19.500 | psychological aspects and
00:02:21.500 | The I guess I mean you would have far more experience than I but the longer I walk around on this planet
00:02:26.900 | the more I realize what a dramatic impact our
00:02:30.580 | psychology and understanding of our own
00:02:33.820 | psychology has on
00:02:36.260 | Just basically everything we do everything we do. It's hard to get away from isn't it? Yeah
00:02:42.060 | Yeah
00:02:42.580 | I mean it's been a sort of a major bonus to have done all this training and
00:02:46.940 | Psychology for career purposes and then be able to use it personally and there's so many different ways that I that I use it now
00:02:53.780 | There's actually in the financial business. There's a massive move
00:02:57.220 | to integrate more of the
00:03:00.300 | research and more of the
00:03:03.580 | Guess the research that people like you and you're a former clinical
00:03:07.340 | psychologist and there are a lot of people who there's a major developing field and
00:03:11.500 | fairly developed probably at this point called behavioral finance and
00:03:16.020 | I actually love what?
00:03:18.060 | One guy in that field says he says that
00:03:22.100 | Here's to the death of behavioral finance meaning that there is no such thing as a special brand of finance
00:03:29.000 | it's just finance and it's all driven by behavior and the more we start to understand the
00:03:33.620 | Things that influence how we approach I think we can make we can make a lot of progress
00:03:39.080 | But I'd like to start if you'd be willing
00:03:41.900 | I know that you in your bio you said that you were a former clinical psychologist and you're not currently practicing
00:03:49.660 | How did you figure out how to get out of the business?
00:03:52.900 | We're that's that's the type of topic that we're very interested in around here. Yes
00:03:57.180 | I mean the way that I ended up finding your
00:04:00.220 | Podcast was through the mr. Money mustache
00:04:04.540 | blog
00:04:06.300 | and
00:04:08.860 | Noticing that you're having some guests on who post on that those forums and
00:04:13.980 | what happened for us is my
00:04:16.620 | my spouse had a
00:04:18.740 | had a year off got a year off from work where she was able to take a year out to travel with with the
00:04:25.700 | Comfort of knowing that she could go back to her job
00:04:29.580 | You know after that year and so we started traveling and during that time. I got my
00:04:37.220 | book contract
00:04:39.100 | And we basically at some point realized that we weren't
00:04:42.820 | Going backwards with our finances at all that we that the kind of small location
00:04:48.260 | Independent income streams that we had and the fact that we were renting out a house back in New Zealand
00:04:55.060 | Meant that we were sort of more than covering our costs and that we actually didn't need to go back to work after that
00:05:02.660 | After that first year, that's so cool. How long have you been traveling now?
00:05:07.360 | So we live we live New Zealand at the beginning of May
00:05:11.740 | 2013 and so
00:05:14.700 | My spouse is a medical doctor and doesn't want to kind of give up her
00:05:18.540 | Doesn't want to get too out of touch with her skills. So she's just been back in New Zealand for
00:05:23.820 | for three months practicing
00:05:26.380 | And so that's kind of the plan from from here on and it's just sort of to not work for the bulk of the year
00:05:33.500 | and
00:05:35.500 | To
00:05:37.620 | What to have this small income streams coming in through the bulk of the year
00:05:40.740 | But then for her to sort of keep her hand and with her with her work
00:05:44.140 | How is she able to?
00:05:46.860 | Do how is she able to work in medicine for only three months of the year and still keep connected? Yeah, it's kind of tricky
00:05:54.740 | So she still does all her
00:05:56.740 | continuing competence stuff
00:05:59.100 | throughout the year and she has
00:06:02.260 | You know various things that she needs to do
00:06:04.580 | And of course, none of those systems are set up for someone that only work wants to work
00:06:10.620 | For part of the year. So she's figuring all of that stuff out was quite complicated
00:06:15.900 | But we did but we did it. Okay, so but it wasn't
00:06:19.980 | You're saying that she's back working in order just to do the bare minimum
00:06:24.260 | It's not like she has she's able to find a contract for three months
00:06:28.100 | She's just going to make sure she stays current. Is she volunteering or she actually getting paid?
00:06:32.460 | She's a she's a GP. So she's a locum. She's a locum GP. So she's working
00:06:38.700 | Like a differs a couple of weeks or a month and different different practices. So it's actually quite
00:06:46.180 | It's quite convenient from that perspective that she can pick up a few weeks of work or a month of work when other
00:06:55.420 | GPs want to go on vacation. So it works. It works well for that
00:06:59.620 | Okay, that that's what that's exactly what I was asking is because that was what I was imagining if somebody who is a general practitioner
00:07:06.740 | You know
00:07:07.140 | If you if a doctor wants to go on vacation and you've got your client base same thing for a financial advisor
00:07:11.220 | If you want to go on vacation, you've got your client base
00:07:13.980 | You got to figure out how to serve your clients while you're gone and the trouble
00:07:17.980 | I mean it's easier as a financial advisor simply because a you can do some work virtually and be you can schedule most things
00:07:23.740 | but if you're a physician and you have a
00:07:26.180 | Class of patients. I mean you got to make sure they're squared away. So very cool. That's it. That's a really neat I
00:07:32.180 | Guess career design and you and she your plan to do that long term
00:07:36.460 | we have a
00:07:39.460 | Five-year plan at the moment
00:07:41.420 | So we the plan is to to try out what we're doing for five years and then and then reevaluate things
00:07:48.300 | After that point so and as I said, we're already
00:07:52.780 | You know, we're I guess almost two years into that five years
00:07:56.260 | Very cool. So let's get to the meat
00:07:58.300 | I won't I just I'm always
00:07:59.940 | fascinated at people who are taking some of the ideas and the principles and then figuring out how to apply apply them in their own life and
00:08:06.860 | One of them that I think is powerful is just simply taking shorter distributed
00:08:12.340 | I do you know distributed retirement or just pulling back a little bit working in more of a
00:08:17.100 | Ebb and flow type of arrangement than trying to work your whole life like crazy and then retire exhausted when you're too old to do anything
00:08:23.940 | Fun. Yeah, and it's completely fascinating and there are just so many different ways to go about it
00:08:30.220 | I love hearing that other people's stories as well
00:08:32.740 | You're coming out with a book and it's entitled the anxiety toolkit
00:08:37.560 | strategies for fine-tuning your mind and moving past your stuck points and
00:08:42.900 | you have some experience with applying that to
00:08:47.340 | Finance and to investing I'd love you to start by just sharing with us
00:08:51.380 | Where would you begin if I'm nervous if I have anxiety over the topics of money and investing?
00:08:57.360 | Where would you begin in counseling somebody through that?
00:09:00.660 | Yeah, so I mean this isn't something that I would have worked with clients about so the types of problems that clients would come
00:09:09.220 | To see me for would be would you know wouldn't be this
00:09:12.780 | but basically what I found is that so, you know, so many of the same principles apply to
00:09:18.740 | apply to investing and and
00:09:21.780 | and
00:09:23.780 | You know my spouse and I've had to get over
00:09:25.780 | we're both kind of anxiety prone and we've had to figure out ways to get over that fear of investing and
00:09:33.020 | There are so many different ways that the same concepts apply
00:09:40.540 | And there and the investing space
00:09:42.540 | you know in terms of looking at the different thinking biases and stuff that that
00:09:47.900 | trouble people with anxiety in different areas of their life that also mean that they can hold back from
00:09:55.780 | from investing and an effective ways
00:09:59.380 | Or could hold back from investing at all. I just never get started
00:10:03.620 | What is it? Why are people anxious? Is it fear of what they don't know? Is it?
00:10:10.100 | I mean, what would be some of the reasons why people are anxious in the first place?
00:10:14.260 | And then what do you do to help them? Yeah, so a lot of it is it's just it's people's temperament is that they have is
00:10:20.740 | So, you know the things that I'm talking about a kind of aimed at people who have a more more anxiety provoked prone temperament
00:10:30.060 | So one of the things is that just you know, virtually all of us
00:10:34.340 | find losses
00:10:38.740 | Really aversive so losing a dollar feels
00:10:41.860 | equivalently worse
00:10:45.300 | then
00:10:46.580 | Then gaining a dollar feels good. So we all tend to be like that and for anxious people that
00:10:52.500 | that tends to be even more pronounced so
00:10:56.820 | people with anxiety have
00:10:59.700 | Tend to be what they call prevention focused which means that they are
00:11:03.780 | Naturally
00:11:08.180 | mostly focused on wanting to avoid things going wrong and wanting to avoid making mistakes as
00:11:14.420 | opposed to someone who's promotion focused who is more focused on
00:11:19.100 | reaching out for new opportunities and reaching out for new rewards and isn't as concerned with
00:11:25.540 | Avoiding mistakes and things going wrong
00:11:28.220 | So when someone has that kind of natural focus and that natural style it can make it really hard to get started with investing
00:11:37.500 | Want to ask you throughout the course of this interview?
00:11:40.020 | I'm gonna ask you some just some about some opinions that I have and I don't know if they're true or not
00:11:44.140 | But I'm interested since you are more familiar with the actual literature and the actual research
00:11:48.860 | Mentioned just to see if you say I'm right or I'm wrong or set me straight
00:11:52.820 | is there such a thing as an anxiety prone temperament and
00:11:58.500 | In what I mean is I feel like that was that's probably me
00:12:03.100 | I don't I don't know what the triggers that a professional would look for but I remember just being so
00:12:08.820 | Nervous and scared about basically anything in life. I'll give you one example
00:12:13.020 | I do a podcast now and so my show is heard by a lot of people and I'm more comfortable with that now
00:12:19.260 | But when I was in high school
00:12:20.540 | I remember that I specifically didn't want to be either
00:12:24.300 | valedictorian or salutatorian of my class because I would have to give a speech and
00:12:29.220 | I had a sister who was valedictorian I had two brothers that were I think both of them were salutatorians of their class and I
00:12:35.300 | Had been to enough high school graduation speeches
00:12:37.640 | And I knew if I was valedictorian or salutatorian, I wouldn't I I would have to give a speech
00:12:43.340 | Thankfully I had stiff competition and I graduated I think number four or five
00:12:46.580 | So I don't even know if I could have or would have done it
00:12:49.340 | But I know that I was just so nervous about the idea of speaking
00:12:52.220 | So is that not anxiety and so but yet I've overcome it or is there something that?
00:12:58.140 | Am I not anxiety prone or there are other people who have something that I don't have? Yeah, that's
00:13:03.420 | That's very typical for someone that's anxiety proven. So yeah, so it is helpful to think of it as a temperament factor
00:13:11.540 | and the difference between an anxiety disorder and being anxiety prone is basically the
00:13:18.040 | Definition of having a disorder is that the problem has to be just stressing and or impairing to you
00:13:24.860 | So if you are stressing and or what?
00:13:27.660 | Impairing. Okay. I don't know. Is that a clinical word? I'm period
00:13:31.620 | accent I
00:13:34.300 | MPA Oh impairing
00:13:36.300 | Accent. There we go. Forgive me. I might your is not quite tuned
00:13:40.700 | Yes, some words are difficult for me to to say in a beer and a beer and quote-unquote American
00:13:50.220 | Yeah, we've ruined the English language. So okay. So that's the that's the that's the differentiation that just because between somebody who's actually has a
00:13:57.840 | Clinical disorder versus something that's just a maybe a more normal part of life. Yeah, so like personally I'm incredibly anxiety
00:14:06.100 | Prone, but it doesn't get in the way of my life and in any way at all anymore
00:14:12.600 | so
00:14:14.580 | And we and when you get to that point with with your anxiety
00:14:18.540 | It's you know, it starts to feel a lot less
00:14:21.180 | A lot it's a lot easier to identify as someone who's anxiety prone when you've when you overcome and it doesn't cause you any
00:14:30.580 | problems
00:14:32.660 | What about mistake avoidance that was what you just mentioned that you know
00:14:36.900 | we have some of us are very prone to just want to avoid the mistake versus
00:14:41.780 | Being focused on promotion. I have a theory about that and I don't know if it's total bunk or not
00:14:47.820 | But I think that's probably learned and it's probably learned due to schooling because I don't know
00:14:53.700 | I mean, I look at my son. I have a he's almost one and a half
00:14:56.380 | He doesn't care a bit about making mistakes
00:14:58.580 | He just tries and tries and tries and tries and he fails and he tries and he fails and he trade tries
00:15:03.060 | But I look at myself over time, you know through the schooling process of constantly told, you know, this was bad
00:15:08.580 | This was wrong and being over corrected
00:15:10.580 | Academically, and I wonder if that's not learned. Do you think it's learned or do you think that that's more of an inherent trait?
00:15:18.020 | I think it's a bit of both
00:15:19.420 | I think a lot of it as inherent and you know
00:15:22.300 | Some of the reasons why it doesn't show up till later will just be you know
00:15:25.460 | in terms of brain development that we don't that some of those that
00:15:30.140 | That tendency to be self-conscious doesn't develop
00:15:33.820 | Till paper and people's brains until they're a wee bit older so that sometimes why you're not seeing it and younger
00:15:40.220 | and younger children
00:15:43.020 | that tendency to be
00:15:45.140 | Concerned with how others perceive you maybe doesn't develop till later
00:15:49.420 | So it's a bit of a it's you know, it's certainly learning can play a part, but there's also a big
00:15:54.860 | temperament factor
00:15:56.700 | Which is why it's important for people to know how to kind of work with their own temperament and to understand that really well
00:16:03.980 | So that it doesn't cause them in any problems and so that you can use it to your advantage
00:16:08.500 | How would you start to?
00:16:11.540 | Understand what your actual temperament is
00:16:14.940 | I have a big chapter in my book
00:16:17.820 | So, you know for people that are anxiety prone
00:16:24.780 | To kind of understand that but there are you know, just I guess just from from reading around
00:16:31.900 | different
00:16:34.620 | From
00:16:38.740 | You know, sometimes it's not the most useful thing to understand
00:16:43.140 | well, there are a few there are a few different aspects of temperament that sometimes people find particularly easy to
00:16:48.980 | particularly useful to understand but you've kind of got a
00:16:52.500 | But you know just googling temperament factors or that kind of thing won't
00:16:57.620 | Often won't be that useful for people. So, you know some of the different things that that that might be useful
00:17:05.060 | Would be more things like
00:17:10.500 | Like when it you know at one point that I wanted to touch on was this idea of people to have a fixed mindset
00:17:16.340 | versus a fluid mindset
00:17:18.580 | so
00:17:19.860 | so learning whether you're somebody that is
00:17:22.540 | Where you tend to see your capacities as fixed you tend to see that
00:17:28.660 | You know that you're not good at math or you're not good at this that now the thing but you are good at
00:17:33.860 | these
00:17:36.380 | Other stuff and that those things are just kind of inherent traits, you know versus somebody that sees themselves as
00:17:43.500 | Being able to improve their capacities through the through effective kinds of practice
00:17:49.300 | So like that's something that's kind of useful to people like learning, you know
00:17:55.020 | Do I tend to have a fixed mindset about things or do I have a fluid mindset?
00:17:59.300 | so sort of learning about
00:18:02.180 | how you are
00:18:04.420 | How your temperament actually influences your thinking style?
00:18:07.940 | It's kind of more useful sometimes than learning just straight straight about temperament itself
00:18:13.420 | Like some of the the temperament factors are things like how easy is it for you to adapt to change?
00:18:19.420 | So that's something that people
00:18:21.420 | That can be quite useful for people to learn about so
00:18:29.140 | You know, are you someone that just reacts negatively or has a big kind of internal reaction to any suggestion about changing plans or
00:18:37.500 | Doing or doing something new or you know doesn't like
00:18:41.420 | Surprises and kind of naturally has a negative reaction or feels really stirred up
00:18:46.180 | When you're out of routine
00:18:48.900 | so that's a temperament factor that people that can be quite useful for people to
00:18:52.980 | understand but generally people want to kind of
00:18:56.420 | Learn more about how they're about their thinking style
00:19:00.140 | More so than just this this straight temperament like it's not that useful just know that you're an introvert or an extrovert sometimes
00:19:07.980 | Versus you know how that influences the way that you think in the way that you act do you mean by thinking style?
00:19:15.860 | Do you mean learning style like?
00:19:17.860 | verbal learner
00:19:20.180 | Kinesthetic learner visual learner auditory learner that type of thing or do you mean something different? Yeah, I mean something different
00:19:25.900 | I mean stuff like whether you've got that promotion focus or the or a prevention focus like whether you're someone that is
00:19:32.500 | Super attuned to avoiding mistakes and losses
00:19:36.300 | or whether you're someone that's got a with you someone that tends to
00:19:41.140 | Think about have to have negative expectations of how things are going to work out. So some sort of
00:19:51.660 | You know some people just automatically assume that they're going to try something and it's not going to work and learning to balance out those
00:19:58.020 | thoughts so that you also think about the
00:20:00.340 | So that you also think about the positives
00:20:03.660 | or if you're someone that's kind of doesn't think about those negatives as much like learning how you can
00:20:10.100 | Kind of train yourself to do that if that's not your natural thinking style
00:20:14.420 | Focusing on the loss
00:20:20.700 | On the promotion focus or the prevention focus, so I'm interested. I don't have any idea
00:20:25.620 | What where I would fall on that scale myself? I've never done that introspection or taking any tests
00:20:33.020 | How what would you ask me to figure to help me figure out whether I'm more prevention focused or promotion focused?
00:20:39.660 | Yeah
00:20:41.020 | I should say that that one of the researchers who's done some really great work around this is a woman called Heidi Grant
00:20:48.660 | Elvison so if people Google her
00:20:50.860 | She's got a bunch of like Harvard Business Review articles and things that people are interested in that topic. They can kind of
00:20:57.980 | Look there. But one of the questions that you can use is to
00:21:02.500 | Is to to look back at your regrets and ask and and if I see well
00:21:07.960 | I kind of what's your biggest regret and if your biggest regret is something that you wish you'd done
00:21:13.540 | But didn't do you're probably more provoke promotion focused
00:21:18.100 | If your biggest regret is something where you kind of regret making a mistake
00:21:23.940 | you're probably more prevention focused, but it's more it's more complicated than that and the
00:21:29.420 | The really complicating factor is that some people can be high and both so you can be high and from you can be both high
00:21:37.740 | and promotion and in prevention focus and those people tend to have a particularly hard time because they tend to like
00:21:44.780 | Have this real conflict would conflict between their accelerator and their brakes
00:21:48.900 | So it can you know if you're high and both it can be really useful to understand what you know
00:21:55.980 | What's going on for you?
00:21:57.980 | interesting
00:21:59.300 | That that does help. I mean just to that question if that's a good starting question that does help because I'm certainly
00:22:05.180 | Even when I started radical personal finance
00:22:08.860 | It was it was I was I just got to the point where I was more scared of regretting
00:22:13.220 | By not doing it then I was of doing it and failing. I was like well, whatever so I do it and fail
00:22:18.720 | You know people fail at things all the time big deal
00:22:21.180 | You know I've worked with enough rich people who've been bankrupt that you know I can get through that
00:22:25.540 | But you know if I continued doing what I was comfortable with and staying in my comfort zone and missed out on
00:22:30.840 | Something that I saw that needed to be done then that was what I feared and what was one of the things that pushed me
00:22:36.100 | over
00:22:37.620 | the decision
00:22:39.100 | Yeah, and what you know one of the things that you said there was really key this idea that you could cope with something that
00:22:45.460 | So you're imagining
00:22:47.100 | You know a negative scenario. So
00:22:50.140 | You know for something so somebody's big fear might be going bankrupt or something like that
00:22:54.740 | And if people can imagine themselves actually being able to cope if that horrible thing happens
00:23:00.280 | Like obviously they're gonna do everything that they can and not make silly, you know
00:23:03.540 | I'll try and avoid silly decisions that so they're not gonna end up in that
00:23:07.140 | Position, but it's really important for people to build to actually think through
00:23:13.100 | How they would cope if that worst fear
00:23:16.780 | Happens like you know, so whatever your fear might have been for starting the podcast
00:23:23.460 | you know, whether it was nobody listening or
00:23:27.780 | Getting really negative comments or whatever it is
00:23:30.100 | But so people need to identify what their worst fear is and then actually think through how they would cope
00:23:36.700 | With that so people that are really high warriors people who have worry disorders
00:23:41.980 | Avoid doing that they avoid actually thinking about how they would cope if their fears eventuated
00:23:48.060 | interesting, I
00:23:50.820 | think I had a bit of a
00:23:53.380 | Had a bit of a
00:23:54.980 | Advantage of probably anybody else in this regard because I bet you when I started financial planning when I was younger
00:24:00.740 | I thought there was a I had the impression that there was a certain thing that I needed to do
00:24:05.060 | And I think I probably would have been more on the prevention side
00:24:08.580 | Meaning I went to college because I needed you know, I felt like that was what I should do
00:24:12.860 | I started putting money in my retirement accounts because that was what I thought I should do and
00:24:16.460 | I had read all these charts about the importance of compound interest starting early
00:24:20.940 | And so I wanted to make sure I didn't miss out and I wanted to make sure that I was doing what I was supposed
00:24:25.140 | To do but then as I started doing financial planning I met with
00:24:28.800 | You know over a thousand people from all different walks of life
00:24:31.940 | And I recognized that even if somebody started at 45 and was totally broke their life wasn't over and here I was at
00:24:38.620 | In my early 20s thinking my life would be over if I was 45 and not rich and here's someone just getting started
00:24:44.860 | Again on their financial plan or rebuilding their fortune or trying to figure things out
00:24:49.380 | They lost it all and I realized that it was it was okay
00:24:53.820 | Not to I guess be perfect from an early age and it really affected my thinking over time
00:24:59.640 | But I had the luxury of being exposed to so many people some of whom were winning some of whom were not
00:25:06.260 | You know currently experiencing great abundance on all different parts of the scale and that helped me to change my my focus
00:25:13.780 | Yeah, and I mean that's one of the you know that for me as well. That's kind of being
00:25:18.980 | A hugely helpful life lesson is to realize that the people are sick who are really successful
00:25:24.820 | They often have just succeeded at a heck like really big at a handful of things
00:25:30.540 | right, so you look at people that are successful and they'll have tons of of
00:25:34.220 | things that that flopped, you know that might might have either been negative or might have just
00:25:40.820 | They might have just been like non reward, you know, they started something and it you know, it didn't have any catastrophic
00:25:48.300 | Consequences, but I just it was a bit of a non-starter
00:25:51.380 | But but most if you look at most successful people they have heaps of things like that
00:25:56.640 | And you know, maybe just a handful of things that actually worked out
00:26:01.100 | So, how could we teach people?
00:26:03.580 | I know you're probably not supposed to say that one is more positive than another but to me it would seem like it's more useful
00:26:10.580 | To be promotion focused than prevention focused. Can we teach people to be that way?
00:26:15.820 | It's it's useful to have a balance like it's useful to be able to kind of switch your thinking
00:26:22.700 | Just like it's it, you know, it's useful to be able to switch between
00:26:26.580 | Optimistic thinking and pessimistic thinking rather than then only have kind of one train of thought
00:26:33.540 | It's useful to hold those things in balance. So
00:26:37.260 | There are you know, there are a lot of ways where it's useful to be
00:26:45.260 | Prevention focus, you know, it's really useful to be prevention focus, you know things like getting you're getting car insurance or health insurance
00:26:52.300 | all those kinds of things where that's super important, but
00:26:55.980 | It's important not to you know, just not to fall too heavily on on one side of the spectrum
00:27:02.860 | That's true that makes a lot of sense because it is certainly, you know as a financial planner I've learned to
00:27:10.300 | be optimistic and focus on the good and
00:27:14.980 | Funny try to so yeah, there's very interesting relationship. I mean you would maybe I don't know. Maybe it's something like you
00:27:21.460 | experienced when you were in in private practice, but where you are one on one hand
00:27:27.900 | motivating and
00:27:29.380 | inspiring and trying to hold a vision of what can be in front of your client and on the other hand you're trying to pick
00:27:34.740 | All kinds of holes in the plan and then make them slightly uncomfortable with you know
00:27:38.700 | Well, if you don't cover this if you don't like you said if you don't buy car insurance
00:27:41.860 | If you don't buy life insurance, if you don't diversify your portfolio, then doom and destruction could be coming your way
00:27:48.180 | So that's the strange
00:27:50.860 | Balance of the two. Yeah, it is a strange balance sometimes but it is a you know
00:27:56.660 | It's kind of like an ongoing project of trying to trying to get that balance
00:28:00.960 | And to get that balance right or as right as you possibly can
00:28:08.660 | With regard to investing one of the things that we in the financial business
00:28:12.420 | struggle over is how to help our clients have more confidence with their investing decisions and
00:28:20.340 | We do these investment profile questionnaires because also when you are an investment advisor and I'm not anymore
00:28:27.740 | But I was you it's a tremendous responsibility to help somebody choose a portfolio
00:28:34.820 | And so that's why we have the you know, people make fun of them
00:28:39.220 | But the investor profile questionnaires that that we've developed to try to understand how a person
00:28:44.580 | thinks and the trouble is that we usually have to be more defensive than
00:28:51.420 | Offensive we have to be more loss prevention focused rather than ultimate gain focused and the reason is because
00:28:59.260 | clients feel the loss far more
00:29:03.140 | Heavily than they do the gain and so in essence the investment profile questionnaire
00:29:07.980 | We can almost never go more
00:29:10.460 | Let's just stick with aggressive as a word even though it's not a very great
00:29:13.980 | It's not a very great descriptor of what you're actually doing in a portfolio, but we can almost never go more aggressive than
00:29:19.980 | How a client answers these questions because we have to have something external to help us not
00:29:26.380 | Apply our comfort level with investing onto a client's comfort level
00:29:31.220 | But I've always tried to figure out how do I help a client to become more comfortable with investing?
00:29:35.900 | So that they can reap some of the greater rewards. Do you have any tools or strategies or tips that would help?
00:29:41.940 | Yeah, so so one of the one of the things that is kind of coming back to that idea of a fixed versus fluid mindset
00:29:49.020 | That I talked about earlier. So a lot of people had this idea
00:29:52.700 | I'm not good at investing and I can't get good at it
00:29:55.660 | I guess this fixed thing that they're not good at and I mean one of the things is to is to think about the
00:30:01.960 | ways that you're that you're actually
00:30:03.960 | Sort of the Wizard of Oz principle like like how did you have that all along?
00:30:08.620 | Like in what ways are you good at investing already that you might not even be recognizing as it as investing
00:30:14.860 | So like, you know even things isn't as you know
00:30:17.660 | As simple as things like you invest in ingredients to cook meals or you're investing but you know
00:30:22.540 | Buy a car or a bike that gets to that gets you to work that allows you to generate income
00:30:27.840 | So looking at the different looking at investing more holistically
00:30:31.860 | rather than just in terms of are you good at plunking money in the stock market like looking at the different?
00:30:39.020 | you know, so the person can start to
00:30:41.860 | See the ways that they might actually already be comfortable with investing and some spheres of their life
00:30:48.180 | and
00:30:50.580 | also the person can
00:30:52.580 | you know can start thinking about return on investment and
00:30:56.620 | and in different kinds of ways like thinking about that in a really flexible way, so it might be something like
00:31:04.420 | You know investing in and LED light bulbs and you're in your house and actually running the numbers and seeing
00:31:11.900 | The return on investment of of that and which you know, which luck
00:31:16.740 | You know, what are your most frequently used lights and how long do you plan to stay in your home and those kinds of things?
00:31:22.180 | or things like
00:31:25.340 | investing time and like, you know your time and your labor into a project that's going to generate return and might be something like
00:31:31.340 | It might be something like learning about travel hacking and applying for credit cards that have signup bonuses and things like that or
00:31:42.300 | Like one sort of random thing that I do is I buy like gift cards online at a discount
00:31:47.380 | So like and I don't go to Home Depot and just use my credit card
00:31:51.340 | I buy I go online and buy like a Home Depot gift card that's selling it like, you know, nine or ten percent off
00:31:57.820 | Because I see that it's you know, if it's spending I was definitely gonna do it's a return on it's a return on investment
00:32:04.860 | so just kind of starting to think about
00:32:07.340 | About investing more
00:32:11.340 | more holistically and
00:32:13.340 | Learning that you can you know, you can develop competence and confidence through
00:32:19.180 | You know all of those different kinds of methods as well
00:32:22.900 | The big thing is is really avoidance so, you know you mentioned like in your example about the
00:32:30.660 | Valedictorian so one of the like really striking
00:32:35.260 | Issues with
00:32:38.820 | Franchise people is this avoidance coping?
00:32:41.140 | So in the heart the harder that you the longer that you avoid something the harder it becomes to do it
00:32:48.020 | So the other yeah, you know, the other big thing in terms of developing confidence is this idea that you that you develop?
00:32:55.060 | Confidence and competence from doing that you don't kind of you the idea is not to wait
00:33:02.220 | Until you feel confident to do something. The idea is that you're going to gain confidence from doing it
00:33:08.300 | So the your behavior influences your thoughts and feelings
00:33:11.820 | And in some ways that link
00:33:15.460 | From behavior to thoughts and feelings as it's even stronger than the influence of thoughts and feelings on behavior
00:33:22.780 | If that is not too hard to imagine it is I mean, it's not too hard to imagine it. It's useful
00:33:29.340 | one of the things I love about podcasting as a medium is
00:33:33.140 | I can go back and many podcasters or even writers will often leave their
00:33:38.900 | original episodes or their original articles or the original essays live and
00:33:43.060 | So you can go back and you can see what did they sound like when they first sat down in front of a microphone?
00:33:48.780 | And I've often wished I don't know who is a great and famous radio announcer in New Zealand
00:33:56.740 | But in the US I often think of someone like Rush Limbaugh has the most widely listened to radio show
00:34:02.480 | And I often wish I could go back and hear, you know
00:34:05.620 | His first shows from the 80s to see what he sounded like because it was probably the most awful
00:34:11.420 | You know most awful unpolished thing ever
00:34:14.580 | but that gives me hope and confidence that just by doing more than I can by doing I can I can
00:34:21.040 | Get better and I've noticed this one of the things in financial planning where I've seen this is I've never seen a successful
00:34:28.060 | I've never seen a person start in the financial services business and
00:34:31.860 | wind up
00:34:33.300 | Being financially successful at it who wasn't willing just to go out and do stuff and just to learn learn through doing
00:34:39.860 | Rather than spend all kinds of time trying to think about how do I get it better?
00:34:43.980 | there is it is important to think about things but some things you got to learn by doing and
00:34:48.660 | That's one of the things character qualities
00:34:51.460 | I wish to teach others and model just get in and roll your sleeves up and you're gonna learn and then
00:34:57.740 | You can deal with deal with things as it goes along is that that's along the lines of what you're talking about, right?
00:35:02.340 | Yeah, that's exactly what I'm talking about. So I mean one of the hard things with investing is that you know, there's there's
00:35:08.660 | You know, not even Warren Buffett does investing perfectly
00:35:13.000 | So if you know if you sort of like anxious and a perfectionist you're often, you know
00:35:17.480 | you often find people are just doing like a ton of research or
00:35:20.120 | Either they they do a ton of research and don't take any action
00:35:24.020 | Or they just completely give up because they feel like they're never gonna be able to figure out how to do it perfectly
00:35:30.500 | And it is just one of those areas where there is no, you know, there is no perfectly
00:35:35.500 | We all you know
00:35:36.240 | We all wish that we could you know buy it the the absolute bottom of the market and sell at the absolute top
00:35:41.740 | But that just isn't you know, that isn't gonna happen. So it is
00:35:45.120 | Something that if you've got a tendency to react to things that you can't do perfectly right out of the gate
00:35:51.460 | By kind of doing nothing then you're gonna end up doing, you know, nothing or doing things that are suboptimal
00:35:57.700 | I'll give two other examples from investing. I think people often have fear
00:36:02.300 | excuse me often have fear of investing in something new for example a new type of investing and
00:36:08.580 | One example would be something like real estate. I
00:36:12.080 | Really respect and admire
00:36:14.980 | Two writers on a real estate John Reed and John shop and a big thing they focus on both of them in their books is
00:36:21.700 | Here's a little bit of theory. Here's what you need to know now
00:36:25.180 | You must commit within X, you know number of months that you are going to locate and buy your first property
00:36:31.380 | Because of all the real estate investors
00:36:33.420 | I know here locally that I've spoken with who've bought and sold dozens if not hundreds of properties
00:36:38.140 | It all started with just getting over the fear in the first one and it probably wasn't a very good deal
00:36:43.860 | But you've got to get over the fear of okay
00:36:46.260 | I'm not gonna get a great a great deal and recognize I'm just gonna get it done and
00:36:49.700 | Once I've gone through it once the first time even if I lose money at least I learned and I got over the fear
00:36:55.540 | I remember another example in my own life when I was younger
00:36:58.860 | I was schooled in the and basically indoctrinated in the popular finance
00:37:02.620 | approach that the only suitable asset
00:37:05.420 | you know class for people to invest in was stocks and bonds and
00:37:09.020 | And maybe some real estate and then I started reading about things like gold things like just alternative
00:37:15.260 | you know hedge funds different things and I realized that I was scared to go and buy a
00:37:21.020 | Goal to buy gold coins. And so I remember forcing myself to say Joshua
00:37:26.740 | This is stupid this you are being an intellectual
00:37:29.480 | Imbecile if you're just sitting here because you're scared to do something that you've been indoctrinated against and so I forced myself to find a gold
00:37:37.220 | Dealer walk in plunk down my money and buy a 1/10 ounce gold coin and I walked out. I'm like wow I survived
00:37:44.260 | And just breaking that barrier to say, all right
00:37:48.180 | I've made it I'm now one of those weird people who owns a gold coin now
00:37:52.740 | I can look at this a little bit more rationally and try to understand how this market is moving as compared to this other market and
00:37:59.660 | I can gain control. So I've had to force myself to do it in the topic of investing
00:38:04.220 | Yeah, and and you just the way that you take in and process information is so different
00:38:10.380 | Once you once you're in the doing stage of something versus the they're just thinking about it's it's stage
00:38:15.820 | Okay, it really you know, the best way to accelerate your thoughts is to to start acting
00:38:21.560 | the best way to have new thoughts and you've
00:38:24.380 | Creativity and you know and all of that is to start taking some some action if you've been sitting on the sidelines with for too long
00:38:31.220 | And I'm definitely not
00:38:33.820 | Someone that believes in the idea that you should you know
00:38:36.660 | Kind of make this you should have negative experiences on purpose like that
00:38:41.200 | That's somehow, you know character building or well, you know
00:38:44.620 | I do think that you should do everything that you can to you know to try and make a profit on that first house that
00:38:49.940 | You buy and to try to try it, you know to try and
00:38:53.020 | You know
00:38:54.340 | Especially in terms of catastrophes to try and and not have those happen and do you know take sensible steps and that kind of thing
00:39:00.740 | but
00:39:01.980 | Yeah, it's there's something incredibly liberating about
00:39:05.300 | About making a mistake and realizing that
00:39:09.860 | or having a negative outcome to something and realizing that you that you coped with it and that it
00:39:16.140 | You know, one of the things that happened to me was that I was beginning into travel hacking quite a lot lately
00:39:25.620 | And I applied for a credit card and they and they declined me and it was the most liberating everything ever
00:39:32.940 | I've never been to class never in my whole life paid a seat
00:39:36.100 | I'm one of those people that's never never in my whole life paid a cent of interest on a credit card
00:39:40.700 | So that you know, like I've no history of ever been declined for a financial
00:39:45.140 | product, but you know, obviously being
00:39:47.820 | sort of new to the US that I
00:39:51.660 | He had pretty limited history here, but it was like, okay so that it was like finding the limit I was like, okay
00:39:57.540 | That's the limit of what I can of what I can do here. I've just hit the limit
00:40:01.220 | It was so liberating to have that happen. You know, it was embarrassing like for the first for a day
00:40:06.580 | I felt embarrassed but then I felt completely liberated by it
00:40:09.780 | That's such a such a great example and it's so funny how we take these things so seriously
00:40:17.820 | That fear of getting declined for a credit card or that fear of a transaction not going through I can remember
00:40:23.740 | Recently I signed up for my wife and I she doesn't like big-box stores, but finally I convinced her
00:40:30.460 | I said listen, let's try it
00:40:31.980 | So we signed up for Sam's Club and we went down and I needed needed to shop
00:40:36.500 | We needed we needed to buy some stuff. So we signed up for Sam's Club and I went there
00:40:41.060 | It was our inaugural purchase and the thing with Sam's Club. They don't accept credit cards. They only accept debit cards
00:40:47.340 | or cash and
00:40:49.020 | So I knew in advance that that was going to be the case and I had made sure that there was plenty of money in
00:40:53.860 | The primary checking account everything good to go and I had two carts worth of stuff that I was buying and it was a I
00:41:00.740 | Mean the bill was I think eight or nine hundred dollars something like that and I get there and my card is declined and
00:41:06.260 | They had swiped two carts full of stuff
00:41:09.060 | I mean it had taken a long time for this to go through and there's a big line behind me
00:41:12.820 | So all of a sudden I just start sweating bullets. Wait, I know there's money in the account
00:41:16.900 | I host a financial advice podcast
00:41:18.900 | I'm not I'm not over drawing my account but just this intense like wave of fear like oh
00:41:24.540 | These people are all judging me. So I tried the other card. I think it's discover card is the one they accept now declined
00:41:30.460 | So I'm saying oh man, how much cash do I have in my in my wallet?
00:41:34.280 | I was able to work it out and it since it was such a large purchase for the first time
00:41:38.180 | the for the first time at the store the
00:41:41.660 | My debit card and credit card company had just simply blocked the transaction and I was able to call them and get it worked out
00:41:47.180 | but man, I was literally sweating at the shame and the fear of
00:41:51.900 | Me having to go and take my two carts that I had spent hours loading and put everything back on the shelves
00:41:58.180 | Yeah, and and new experiences, you know that often go like that, right?
00:42:03.540 | You know was the first time that you've that you've gone to Sam's Club and you know that
00:42:07.980 | It's so often your element
00:42:11.380 | Yeah, the first time you do something there's this unexpected blip with it and that's what people with you know
00:42:18.140 | It's it's so there's a you know
00:42:19.740 | There's a difference between trying to avoid a catastrophe trying to avoid like losing a lot of money or trying to avoid getting stuck
00:42:27.500 | And something that you you know
00:42:29.780 | Some kind of bad scheme that you can't get out of you should work really hard to avoid catastrophes
00:42:36.420 | but those kinds of
00:42:38.780 | Negative experiences that are really just emotional. They're really just a bit embarrassing or a bit awkward
00:42:44.820 | So, you know the the people that that do well are the people that are willing to tolerate those feelings
00:42:52.580 | So there's a big kind of literature
00:42:55.000 | you know big sort of research literature around the fact that that people that
00:43:00.360 | People are a lot more successful in their lives if they're able to tolerate a degree of discomfort
00:43:08.420 | you
00:43:09.940 | Know exactly the kind of example that you're talking about
00:43:12.700 | Do you think is that something that can be intentionally trained that we can intentionally train ourselves to be comfortable with discomfort
00:43:21.580 | Yeah, yeah, so it's much absolutely and it's much more about
00:43:26.180 | Like learning as you just as you say learning to be comfortable with discomfort than it is trying to eliminate all sources of discomfort
00:43:34.420 | from your life, but there's you know been a big shift and
00:43:38.260 | And in psychology towards that idea that
00:43:43.980 | That that comfort with discomfort is just a hugely valuable
00:43:49.620 | Psychological skill or willingness to tolerate discomfort as hugely as hugely valuable
00:43:56.060 | I mean you think about all the things that people would avoid if they weren't willing to so I know a lot of people that
00:44:01.600 | Really avoid the phone so that they would they really don't want to bring customer service
00:44:06.660 | you know, they don't want to ring around and get different quotes for their insurance or they don't want to
00:44:11.100 | have different trades people come over and get you know quotes from three three trades people for a job that they need done in their
00:44:18.460 | home or
00:44:20.460 | That they they'll just avoid those things and you can just say how the people that are willing to go through
00:44:26.620 | Those experiences where they feel a bit awkward like asking, you know
00:44:30.800 | asking for a raise or negotiating a salary or those kinds of things like the
00:44:34.880 | Cumulative effects of being willing to tolerate that small moment of discomfort just like over a lifetime
00:44:41.920 | They just let they leave the person so much better off
00:44:44.960 | Yeah as a parent I think about this
00:44:48.640 | As one of the most valuable things I can do for my kids and I'm thankful that my parents did it for me
00:44:53.540 | When we grew up
00:44:54.840 | We grew up camping all around the u.s
00:44:57.200 | and the thing I love about camping is it forces you into just these awful circumstances sometimes and
00:45:02.560 | You're just stuck in the car and it's been all day and you're driving across
00:45:07.440 | Kansas and you have 400 miles to go and if you've never driven across Kansas someday you will and you'll understand
00:45:13.480 | But it's just a long day in the car and you're sick and tired of it and you're upset and you're cranky and you're grouchy
00:45:19.400 | And then it's an amazing opportunity
00:45:22.560 | to learn to control your attitude and to not let your attitude be affected by the circumstances around you or
00:45:27.840 | You get rained out or you get hot or something like that
00:45:31.280 | It's just that was one of the tools that my parents used to to bring discomfort into our lives
00:45:37.640 | And we had a great time and there's all kinds of peak experiences as well
00:45:40.440 | But the discomfort is so valuable and I look at what a great gain
00:45:45.840 | We can how how how well we can serve young people if we give them opportunities to be uncomfortable
00:45:52.640 | While they're young so they can learn to control their attitude learn to control their emotions learn to control their feelings about it
00:46:01.680 | While it's you know while they're young rather than having to be 43 years old and all of a sudden
00:46:07.520 | Blowing up at somebody because they've treated you unkindly or because they've been short with you
00:46:14.600 | Far better to learn that when you're young
00:46:16.600 | For sure
00:46:20.000 | So as we start to wrap up here is
00:46:22.160 | Is there anything else on any other ideas that you have or other thoughts that you have that would be helpful to listeners who are?
00:46:27.720 | Working to overcome and tame their anxiety
00:46:31.000 | Yeah, so I mean there are a few like just little sort of tips and tricks that people can use
00:46:36.640 | one of the
00:46:39.000 | you know specifically about investing one of the things that people can find quite helpful sometimes is to
00:46:44.720 | Write a letter from their future self back to their current self. So
00:46:50.000 | we often feel like
00:46:52.640 | Like our future self like a you know that the self we're gonna be and you know
00:46:57.560 | 20 or 30 years time as almost like a different person from from our current self
00:47:02.720 | So sometimes it feels like the consequences of either
00:47:06.080 | You know making good financial decisions or not so good ones are gonna be almost
00:47:10.000 | Experienced by someone else rather than by you just an older version of you
00:47:14.440 | So one so one thing people can do is like, you know, maybe write a letter
00:47:18.280 | Back to the back to their current self from there, you know, they're 20 years older version of themselves
00:47:25.080 | You know saying thanks for going through that that thanks for going through those initial
00:47:29.760 | Stages where you really didn't feel like you were you knew what you were doing or thanks for going
00:47:35.600 | You know staying the course when there was that downturn in the market you felt like point, you know yanking all your money out
00:47:41.920 | all those kinds of things to try and sort of
00:47:45.840 | bridge that gap from your current
00:47:48.440 | current self to your future self so that they start feel so it starts feeling like
00:47:52.480 | all these good things that you're gonna be doing are actually the benefits are actually gonna be
00:47:56.880 | Experienced by you at some point in the future and not like some different completely different person. It's a great idea
00:48:02.880 | I could probably be applied to far more than just finance
00:48:05.420 | That can be applied to what we eat and how we move and how we live our lives
00:48:09.480 | Yeah, and I mean the other thing is
00:48:12.440 | You know is to I guess to make a plan
00:48:16.040 | So, you know
00:48:17.000 | one of the things that sort of I found useful and thinking about my own like asset allocation and things was to you know to
00:48:23.200 | Look back and actually see like if I had that allocation back in you know
00:48:28.440 | 2008 2009 what would have happened to my investments and like how would I have handled that and thinking about you know, if you
00:48:36.480 | You want to understand what your own worry is?
00:48:40.040 | like as you as you were concerned that you're gonna yank your money out of your investments if there's a
00:48:44.560 | If there's a downturn or as you're concerned that you're gonna maybe not yank your money out, but you're gonna not keep
00:48:51.440 | You're not gonna keep you contribute contributions up or kind of looking at different scenarios of
00:48:57.520 | From what you know about your own behavioral patterns and your own thought patterns
00:49:01.600 | What you know what you might be inclined to do and coming up with like an actual behavioral plan for what you do in that
00:49:08.720 | Situation like who would you talk to what sort of data would you look at?
00:49:12.520 | Before you before you did something rash
00:49:16.400 | You know, those those are you know
00:49:20.480 | Those are a few options for what somebody could do, you know, it's
00:49:27.080 | it's being pessimistic and being somebody that
00:49:30.600 | That that thinks about what could go wrong is not a negative thing
00:49:36.560 | that's a you know, that's my natural temperament and you know used to probably feel a little bit and
00:49:41.880 | Ashamed of that being my natural temperament or like people would you know
00:49:46.760 | tell me to be more more more relaxed or more happy-go-lucky or those kinds of things and
00:49:52.680 | What I've kind of learned about myself and what you know
00:49:55.240 | It's true for a lot of other anxious people is that they actually feel better when they're when they're prepared
00:50:00.880 | for
00:50:03.080 | Things that could go wrong
00:50:05.080 | And there are ways that you can do that that are actually useful
00:50:08.600 | Versus and there are ways that are not useful like, you know
00:50:12.880 | Just doing continually doing research on a topic
00:50:15.760 | But never getting to the point where you feel like your plant you like your plan is perfect enough as obviously not useful
00:50:21.840 | whereas having like a you know, a three-point plan for what you're going to do if some
00:50:26.440 | Concerning thing happens is
00:50:31.200 | As a as far more useful I can give two practical examples
00:50:36.880 | from the world of financial planning of ways that I
00:50:41.480 | See in ways that I've learned to apply exactly what you said
00:50:44.800 | You said make a plan and then make a plan for being prepared when things go wrong on the making a plan thing
00:50:50.120 | I see that as a primary foundation of a good investment strategy is to decide in advance
00:50:56.640 | What your course of action is going to be?
00:50:59.720 | when
00:51:02.800 | Circumstances happen so whether and and this would vary depending on your
00:51:08.440 | You know your style of investing so some people might be having a very active
00:51:13.800 | trading style of investing and they say and they're putting in place and they're saying well if
00:51:18.600 | If this company that I'm investing in if the share price moves by this percent, that's my trigger to sell
00:51:24.960 | The key is having that written down and on paper in black and white
00:51:29.720 | So that when you're in the midst of the emotion you can go back and you can look at your plan
00:51:34.120 | And of course, you can always change your plan
00:51:36.120 | But at least force yourself to be accountable and say I'm changing my plan because of this new information that I didn't have before
00:51:43.560 | and make sure that you're not just simply changing your plan because now you're feeling the fear or the euphoria of
00:51:49.400 | Whatever phase you are in a market cycle, and I think this will force you to understand your plan
00:51:55.040 | So that would be it could be applied by an active
00:51:57.920 | Trader or it could be applied. Let's say that somebody is following a very consistent buy and hold
00:52:04.520 | Style of investing in this scenario
00:52:08.720 | then I know that my plan is to do absolutely nothing and I know that over time that will work out because
00:52:16.600 | The over the majority of the time my investments will increase in value and there will always be massive gut-wrenching
00:52:23.560 | temporary anomalies, so if I own a
00:52:25.880 | Portfolio of index funds then I know when the market drops by 30%
00:52:31.320 | I will do nothing and because I've thought it through ahead of time
00:52:34.720 | I know I'm not gonna change anything and then if you if that makes you uncomfortable
00:52:39.000 | Then with that with that thought because some people in the audience are saying absolutely and some people are squirming like how could you ever do?
00:52:45.520 | That if that makes you uncomfortable, then you know, you've got the wrong investment plan
00:52:49.640 | You know that you're not going to be comfortable going through that. So you need a different plan that's gonna suit your natural
00:52:54.720 | personality
00:52:56.920 | As far as actual the how to apply it. I think it can be applied on the portfolio perspective
00:53:02.680 | But the powerful tool that I hear a few people talk about is what I call financial planning
00:53:07.960 | Which is how can I put some some planning in place so that I'm prepared if things go wrong in my investment portfolio?
00:53:15.440 | Example would be this let's assume that I have all of my invested in all of my money invested in the general
00:53:21.960 | you know stock market and it's
00:53:24.200 | 2008 and all of my money is there and
00:53:27.480 | I lose my job and my wife loses her job
00:53:31.920 | Well all of a sudden and we don't have any savings. That would be a key thing. Well all of a sudden
00:53:36.560 | I'm gonna be freaking out when my portfolio is down 30% and I've lost my job
00:53:42.680 | But these are these might be disconnected things or they might be connected
00:53:46.800 | The key is to be able to differentiate from them
00:53:49.360 | So I need to think of that in advance and I need to say what do I what am I going to do?
00:53:53.680 | If that happens, well, it would be wise for me to have savings have assets that aren't in market
00:53:59.920 | If I know I'm gonna be freaking out maybe I would lower my debt burden or eliminate my debt so that I can be more
00:54:05.800 | Comfortable in that scenario. Maybe I will make sure that my portfolio is balanced in such a way
00:54:10.800 | But I'm gonna think through that in advance and then by thinking through it
00:54:14.080 | I can put some planning things in place today because I'm not smart enough to know
00:54:18.460 | exactly when the market as a general whole made up of millions and millions of people the collective actions of millions of people all of
00:54:25.280 | Whom are making their own individual decisions about when to buy and when to sell and what to do
00:54:29.520 | I'm not smart enough to predict the actions of millions of people
00:54:32.800 | But I can look at my life and I can plan and say if this happens then I need this in place if that happens
00:54:39.080 | then I need this other thing in place and that can alleviate the anxiety of
00:54:43.200 | What happened?
00:54:45.360 | you know how of
00:54:46.760 | That can alleviate my anxiety if certain events happen because I've thought them through in advance and I know what I would do
00:54:53.720 | Yeah, I mean what I mean one of the points that I would make is that I
00:54:57.720 | That there may not mean if for somebody there may not be a plan
00:55:02.800 | So this idea that that that if you feel uncomfortable, it's the wrong plan that there are for someone
00:55:09.840 | That's anxiety prone who's very, you know, very conscious of any kinds of losses or you know, any kinds of mistakes
00:55:16.760 | they might not there might not be any version of a plan where they feel a sense of of
00:55:22.880 | Comfort with with you know with losses and it's I guess, you know thinking about you know
00:55:29.080 | What would feeling what would feeling uncomfortable feel like and what's the sort of what's the level of?
00:55:36.460 | Discomfort and what types of discomfort are you able to tolerate?
00:55:41.560 | You know this is trying to sort of you know, especially the the
00:55:48.880 | And when I say American way, but like I mean sort of the way the Western world is this idea that we that we want to
00:55:54.800 | Avoid all all sources of discomfort and you know
00:55:59.000 | You were saying before about that the importance of not doing that so there might not be a version that feels
00:56:04.160 | that feels comfortable but
00:56:07.280 | Sort of separating that out and thinking what's the right?
00:56:11.120 | You know, what are the what are the the right things to do?
00:56:15.000 | regardless of how comfortable or uncomfortable it feels and
00:56:18.880 | For somebody that's very anxious
00:56:21.800 | That might be what they need to do because they might if they spend their whole time searching for something that feels comfortable
00:56:28.200 | They might never ever get started because there's no perfect thing that actually makes them feel completely
00:56:33.200 | comfortable and even and people learning that like that even
00:56:37.120 | Even when you're doing the right thing
00:56:40.480 | There are there can be these moments of massive discomfort and learning sort of through experience that that's not in this
00:56:47.560 | you know that those
00:56:49.080 | That those anxiety feelings are not some are often false alarms are often just about the fact that you're doing something new
00:56:56.680 | Rather than them being kind of real
00:56:59.840 | Alarms telling you that you're doing the wrong thing. I
00:57:03.720 | See your point
00:57:07.320 | It makes sense
00:57:09.080 | It's hard to know where that line is though because I've served I've turned away people and I've simply said listen
00:57:14.440 | You should not be investing in public and trade of securities
00:57:16.760 | Like there are some people who they can't you know, the fact of being out of control entrepreneurs as an example
00:57:21.880 | Many entrepreneurs thrive on this sense of control and for them. They're just gonna make bad bad decisions
00:57:28.640 | And so I've often just thought you know, you're better off investing in this different this other type of thing
00:57:34.560 | You're better off investing in private businesses. You're better off investing in real estate
00:57:38.960 | You're better off investing but then to someone else who is comfortable with that you're better off, you know investing in public and trade of securities
00:57:46.160 | and it's always it's a challenge to figure out where that line is because I think that
00:57:51.280 | The whole reason why
00:57:55.320 | It's why it's tough because I think that both of those things are absolutely true
00:57:58.960 | There is no such thing as the elimination of risk. There's no such thing as perfect safety
00:58:04.600 | It doesn't exist. But yet we do I think our temperament is important
00:58:09.680 | Yeah
00:58:10.300 | And how to how to meet it but not how to be a slave to it just because you know
00:58:16.040 | I'm not gonna invest in this type of investment because I just don't I'm scared of it
00:58:19.200 | I don't want to learn anything about it. Well, that's probably not a useful
00:58:21.880 | character trait
00:58:24.080 | recognize your temperament
00:58:26.080 | But also recognize that you can learn something about it and you can be you can feel more confident with education
00:58:32.400 | Yeah, no, I mean, I absolutely agree with what you what you're saying there what I'm kind of
00:58:37.640 | particularly talking about as the as the person who's very anxious and
00:58:42.680 | Can and there's no version that makes them feel completely comfortable. There's not starting a business. There's not investing in real estate
00:58:50.200 | There's not having you know
00:58:52.240 | 50% of their asset allocation and bonds that all of those things make them feel nervous
00:58:57.280 | So if you're one of those people with all of those things that make you feel nervous, you know
00:59:01.400 | You you want to go with that you do you want to find that the the thing about them saying?
00:59:06.320 | Yeah, the best diet is the diet that you'll stick to right right about so it's kind of working. I
00:59:11.880 | Absolutely agree with what you're saying that it's really important to understand your
00:59:16.840 | Understand your temperament but also be really and it's really important that if you're somebody that when nothing makes you feel comfortable
00:59:25.480 | to pick something
00:59:29.400 | Any other tips on your list or anything else that you want to mention that would be useful to the audience
00:59:33.500 | Maybe
00:59:37.120 | Figuring out what kind of monitoring works best for you. I think it's kind of an important part of an investing plan as well
00:59:43.160 | How do you like?
00:59:44.640 | so with a
00:59:46.440 | Checking in on your portfolio once a month is useful or getting email alerts when there's some kind of you know
00:59:53.040 | Change in the market like setting up alerts
00:59:55.040 | you know that if you know the
00:59:58.160 | Stock price drop drops by a certain amount that you know
01:00:01.040 | And you that's on sale and you want to buy some or just kind of figuring figuring that out
01:00:06.320 | I think that that can be quite important that people who are anxious tend to either over monitor or under monitor
01:00:12.720 | So kind of figuring figuring that out is important
01:00:16.320 | And I'd also just say, you know
01:00:18.720 | Really think it kind of coming back to that idea of thinking about this holistically like thinking about your whole money picture really whole
01:00:26.680 | so that you know working on the things that feel possible for you, so if
01:00:30.840 | you know if things like
01:00:34.120 | Reducing expenses by you know, making those customer service calls to get
01:00:40.440 | to get your
01:00:42.320 | insurance rates down or those kinds of things or asking for a raise or
01:00:46.200 | Like doing all of that seeing all of those things that you do to improve your money picture is sort of part of the same
01:00:54.360 | Goal of becoming of developing your confidence and incompetence and in the money arena and that you can start
01:01:02.420 | You know wherever you feel able to start with those types of things
01:01:07.160 | Yeah, the comfort level with a calculator to calculate the unit price at the store is no different than the comfort level of sitting
01:01:16.040 | down and
01:01:17.680 | Calculating what you believe to be the intrinsic value of coca-cola
01:01:22.120 | There's a few more numbers involved, but the steps are the same and so getting used to that method of thinking I think can
01:01:29.200 | Can really be a valuable?
01:01:31.680 | education
01:01:34.400 | Anything else on your list?
01:01:36.800 | I
01:01:37.960 | Thank you for coming on
01:01:39.160 | I love having professionals like you in the audience because it helps me to well
01:01:44.680 | I love it
01:01:45.160 | I love it because I can air some of my wacky ideas and then be set straight or
01:01:49.920 | Kind of feel good about wow. I came to that accidentally and
01:01:53.040 | And here is a little bit of external external corroboration. When does your book come out? It comes out much the third. So yeah
01:02:01.840 | Exactly a month from when we're taping this. Okay. Yeah, so we're recording on February the 3rd
01:02:07.000 | This will probably go out either this week or next
01:02:08.960 | So it kids is available now for pre-order if any on Amazon or anything like that
01:02:13.680 | Yep, so it's available in both paperback and Kindle version on Amazon and will be available in all the usual places
01:02:21.520 | That books are sold and go ahead and just give us a quick a quick advertisement on it as far as what's in it
01:02:27.320 | What's it about who it would be a good fit for? Yep. So it's called the anxiety toolkit
01:02:32.240 | And it's really practical
01:02:35.680 | it covers
01:02:38.960 | Discrimination so over over thinking about things like, you know when you get stuck on
01:02:43.060 | You know
01:02:44.320 | Maybe you have an awkward conversation with somebody and then it sort of sticks in your mind and fun find yourself sort of lying awake
01:02:49.560 | At night thinking about it or driving home in the car thinking about it
01:02:52.880 | It covers hesitating too long before making decisions covers perfectionism
01:02:58.200 | Covers avoidance coping it's aimed at
01:03:04.160 | It's intended to be helpful both for people who have actual anxiety disorders, but more so people
01:03:10.920 | Who have an anxious thinking style who might want to learn about their thinking and behavioral patterns a bit more
01:03:18.760 | How cool that you can do your book tour while you're traveling?
01:03:22.640 | And work with I would assume you've got kind of a book launch strategy and lining up the media
01:03:28.560 | How cool that you can be on the road?
01:03:30.600 | Enjoying a location independent lifestyle and still write and publish your book and do the publicity. What a cool world we live in
01:03:36.320 | Yeah, it's a very cool world. I know you have a website Alice boys calm
01:03:41.640 | Anywhere else that you want people to know about you?
01:03:44.160 | Yeah, the Alice boys calm one is as a as one that I had for my practice
01:03:48.440 | So that's not very active at the moment the the two places that I am
01:03:52.400 | That I'm more active the book website, which is the anxiety toolkit
01:03:58.000 | Calm and also my blog for psychology today calm
01:04:01.480 | So I wrote my I wrote a blog on my own site up until about
01:04:04.960 | 2012 and then all my new articles since then are on my blog for psychology today calm
01:04:10.760 | Very cool. I'll make sure that those are on here. Those are listed in the show notes. Dr. Boys
01:04:15.720 | I appreciate you making time to come on. Good luck safe travels to you. Thank you
01:04:19.520 | Perhaps I shouldn't try to do therapy for myself right live on the air
01:04:26.160 | But hey, it's not every day you get a former clinical psychologist to talk to you
01:04:30.640 | And sometimes it's nice to learn a little bit about something about yourself, isn't it?
01:04:34.800 | At least I enjoy that after all it's one of the reasons why I do the show the way that I do it
01:04:38.800 | I get to learn something
01:04:40.120 | I'm not an expert in everything. I'm an expert in maybe just a couple of things
01:04:44.200 | But the rest of the time I'm just interested and a little bit of introspection and knowing yourself even as dr
01:04:50.260 | Boys emphasize can be so so useful
01:04:52.260 | So thank you so much as we go today. I'm gonna read a couple of iTunes reviews
01:04:56.040 | And if you enjoy the show or if you hate the show, you wouldn't be here at that point
01:05:00.880 | But if you enjoy the show, please leave an iTunes review and make sure that you're subscribed in iTunes
01:05:05.200 | That is so so helpful super super helpful when you do that
01:05:08.480 | That it just helps it helps the rankings. It helps all of that stuff. So let's go with Joe's review
01:05:14.720 | He says knowledge is power one of the best podcast outs
01:05:18.080 | Podcasts out there for anyone looking to learn more about personal finance
01:05:22.600 | Joshua educates on topics that can have an impact on your finances and life
01:05:26.320 | He knows this stuff isn't trying to sell anything dives deep into most topics while also being easy to listen to highly recommended
01:05:33.040 | Thank you, Joe. I am gonna sell stuff in the future. I just got to create it first
01:05:36.720 | And I am selling you my ideas every day
01:05:39.680 | So I love I love selling and it's one of my favorite things to do and so I am selling stuff
01:05:44.800 | I just don't have enough stuff to sell
01:05:47.560 | Let's see stammer here says fantastic podcast of all the personal finance podcasts
01:05:52.200 | Joshua's radical personal finance is the most in-depth and valuable. I've come across just an absolute treasure trove of information and insight
01:05:59.360 | Thank you so much, Joshua. I learned something new every time I listen. Thank you. I appreciate that
01:06:04.720 | That means a lot. By the way, some of you who are listening in other countries. I
01:06:08.400 | I see your reviews. I haven't forgotten about them
01:06:11.880 | What happens is I don't have a system where they automatically show up in my inbox
01:06:16.760 | Where I keep these ones that I'm gonna read on the show, which is all the US based ones
01:06:20.640 | So thank you. I saw a review from Finland a bunch of reviews from Canada
01:06:24.600 | Thank you to each and every one of you who's leaving me those reviews. I really really appreciate it
01:06:29.280 | That's it. Be back with you all tomorrow. Have a great day
01:06:33.280 | [Music]
01:06:48.280 | Thank you for listening to today's show if you'd like to contact me personally
01:06:51.960 | My email address is Joshua at radical personal finance comm
01:06:57.720 | You can also connect with the show on twitter at radical PF and at facebook.com slash radical personal finance
01:07:04.400 | This show is intended to provide entertainment
01:07:08.040 | education and
01:07:10.240 | financial enlightenment
01:07:11.960 | But your situation is unique and I cannot deliver any actionable advice without knowing anything about you
01:07:19.200 | please
01:07:21.080 | Develop a team of professional advisors who you find to be caring
01:07:26.520 | competent and
01:07:27.880 | Trustworthy and consult them because they are the ones who can understand your specific needs
01:07:34.160 | your specific goals and provide specific answers to your questions
01:07:40.000 | I've done my absolute best to be clear and accurate in today's show
01:07:44.600 | But I'm one person and I make mistakes if you spot a mistake in something
01:07:49.280 | I've said please help me by coming to the show page and commenting so we can all learn together
01:07:55.480 | Until tomorrow. Thanks for being here
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