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THE HIGHEST expression of complexity is thoughtful simplicity. It’s like standing on a mountaintop after navigating the ascent.
The work of the mountain’s trailblazer is arduous. He or she must focus intently on the task at hand, glancing left and right, guessing what will come around each new bend. But from the pinnacle looking down, the perspective puts the most efficient path in clear view. It becomes possible to make a map to aid those who will come next.
If we ever want to get out of our own way, to enjoy more money success with less unnecessary effort, we must embrace the simplicity that comes with perspective. But that isn’t always easy to do, especially amid all the noise emanating from the financial services industry.
Simple strategies are okay for beginners, or so we tell ourselves. But who wants to remain a beginner forever? Instead, we want complexity, subconsciously thinking it’ll help us achieve the status we long for.
There’s a temptation to view financial planning as some sort of magic art. We might think the clever planner can allow us to reap what we didn’t sow—to somehow create financial gain with no logical underlying economic substance. But in reality, financial planning is a very rational process. Really, no magic.
Its value is in helping us make intentional, knowledgeable choices that can stretch the utility of every dollar. The planning, however, plays only a supporting role—never taking the lead. If we don’t supply any wisdom, financial planning won’t create it.
Want to put the highest level of financial planning to work for you and your family? Learn to appreciate complexity’s beauty—as expressed in thoughtful simplicity.
Thank you to everyone for reading and commenting! I elaborate on this topic in Chapter 3 of my book How to Love Money. On my website, you can download it to your favorite e-reader at no cost.
“We” do all those things? I have been happily invested in Vanguard index funds for decades. I own a small amount of my former employer’s stock, which I would sell if it were not for the capital gains (and the complexity of figuring them out), and I own a couple of actively managed funds (Vanguard Wellesley and Tweedy Browne International Value), again because I bought them way back when. My investments have grown quietly but significantly over the years, benefiting from benign neglect. But then, I consume little financial news, and have no interest whatever in following individual companies.
In general, I agree that simplicity has great merit. But…
My individual stocks have vastly outperformed my mutual/index funds. During the current market downturn my index funds have declined faster than my individual stocks. Opting for a slight increase in complexity has been rewarding.
I’ve witnessed too many family probate nightmares. I haven’t encountered the same issues with Trusts. IMHO the beneficiaries of significant estates may be best served by the complexity of a trust.
(I’m not an attorney/financial advisor)
Indexing may be simple, but those who don’t believe in “Buy High, Sell Low” (which is what broad market indices do) can easily create their own index and hold for decades without the associated expenses and turnover.