Can We Control Our Investments, or Is It All a Game of Chance?

In life and also in investing, we don't always have control. Although we can create goals and take concrete steps to achieve them, live within our means, try to manage risk, this doesn't always protect us. There are too many other unknowns: the government, the ever-changing tax code, other investors, and the market as a whole. It's like acknowledging the futility of eating healthy and buckling up, since on your daily jog, even if you run facing traffic in your reflective vest, you risk getting run over by a drunk driver. So what can we do to protect ourselves and our future? Do we just leave everything to chance or are there reasonable steps that we can take to help our investments succeed?

Work hard at the right things

Don't just sit back and wait for things to happen. Get working. There is a difference between being busy and looking busy. Make sure the work you do is effective work, and not just an activity to fill your time. Be efficient. As Tim Ferris in The Four Hour Work Week says, work smart, not hard. Working hard just to earn more money and put it into dubious investments may not be the smartest use of your time. Deciding where to allocate your investments may be just as important as, if not more so, than deciding to invest in the first place. Therefore it is well worth the time and energy to investigate the best investment for your particular situation, and not commit to the first cold-caller who interrupts your dinner hour. Doing plenty of research and due diligence can only help you.

You work hard and so should your money. Sometimes a high-risk, high-potential return option may be the best choice for you. Other times, more conservative investments may be more suitable. And still, there are times when your portfolio should be balanced between conservative and risky positions. Preservation of capital and peace of mind are both important concerns. All of these factors are dependent on your personal situation, so examine your options with a clear head and an open mind.

And of course, don't despair while reading this. Although so much in life is out of our control, there is one sphere where you can have influence. Monitor your work habits, your investments, and your stress levels. The outside world may attempt to dominate you, but you alone dictate your reaction. You can choose how to react to a down market: with despair or looking at it as a new opportunity.

Douglas Goldstein, CFP