When the real risk is failing your goals

Photo: The Image Takers

Earlier this year I raised the concept of getting scared of our own success. We use our money to facilitate our lives, but sometimes we get hooked on the money itself. So when it comes time to use it for the reason we intended, we lose sight of it being a resource and are afraid to take action. 

A couple of months ago I sold a parcel of shares, despite being uncertain if I would still need the money for the reason I had originally planned. Due to where the investment markets were sitting (late cycle), I felt it could be risky to defer the sale. On the other hand, by taking it out early I could potentially miss out on more gains. 

I was sitting on a pretty nice capital gain, so I would need to pay capital gains tax, but it would also mean I crystallised my gains. This means that I was converting gains on paper into cold hard cash. 

Alternatively, I could have held out for another couple of months while I waited to be sure if I needed the cash. By waiting, my assets could be worth more, or less. The reality is, I don’t know. That’s the risk/return spectrum that we all must walk.

Lock it in Eddie, I eventually decided, the money was real.

I deliberated on this decision for longer than necessary. I was distracted by the potential growth in my investments, and felt queasy at the risk of making a bad call.

But I know why I eventually took action — I was anchored in what my money was there to do for me. It was to serve one of my goals, a clear intention. I had the required amount of funds, so why on earth would I consider risking the value and jeopardising my goal?

If it turns out that my plans change and I don’t need that money, I can invest it again, or put it towards another goal.

The thing to remember is that our money is there to facilitate our lives. We shouldn’t be scared to use it for the reason it was intended, and it doesn’t need to be viewed with permanency. Instead, ask, how can we create flexibility?