The first thing people often ask me when they are thinking about investing is “what should I invest in?” However, the first question they should be asking is “why am I investing?”
In a previous post, I talked about the motivations for investing. If you’re wondering or thinking about why you are investing in the first place, look to what your motivations are. Motivations provide the origins that answer the question, “Why am I investing?”. Your values help you answer this question and make a decision about your motivations for investing.
Rather than blindly follow fads or adopt the reasons why other people invest, applying your values to the decision about why you are investing is more likely to result in a satisfying investing experience and outcomes that more likely match your expectations.
To apply your values in deciding why you are investing, do an exercise that tests motivations for investing against your values. Consider the possible motivations for investing and identify your current motivations for investing. Which ones reflect your values? I call this a “Validity Test”, checking if your motivations to invest accurately reflect your values. For example, is it power that motivates you to invest and is power something you value? Or Is it the need or desire for investment income and is yield important to you? Or do you want to invest because you feel it demonstrates leadership and one of your core values is leadership?
Now, try it the other way around – given your core values, are their any motivations for investing that better reflect your values and are missing from the list of your current motivations for investing? How do you feel about why you are investing? Feelings of dissatisfaction, doubt, or sometimes it’s just a niggle or a nagging feeling at the back of your mind. These could be signs that something is amiss. I call this a “Completeness Test”.
Taking steps to align your investments with your values starts with why you are investing. Let your decisions and actions as an investor reflect with your core values. Let your values shine through. If your motivations for investing are not aligned with your values, the outcomes certainly won’t be aligned either. If your motivations are aligned with your values, you have a good foundation for making investment choices that you will feel good about, even proud about, and that will make sense to you.