My good friend got into an unavoidable situation to introduce some panel speakers at an event. He has an immense challenge speaking English, increasing his stage fear. One of the speakers noticed his nervousness backstage and approached him. As it turned out, his biggest hurdle was speaking fluently, although he had memorised the content. The speaker gave him a piece of simple advice.

“Speak to the audience on the left side of the auditorium and then pause and look on the right side to finish your sentence. No one will notice, and your speech will appear fluent”. And indeed, this simple advice worked for him.

In the classic investment book Winning the Loser’s Game, Charles Ellis shared an excellent reminder of the importance of focusing on the big picture:

Please keep in mind the observation of two of my best friends, who are at the peak of their distinguished careers in medicine and medical research. They agree that the two most important discoveries in medical history are penicillin and washing hands (which stopped the spread of infection from one mother to another by the midwives who delivered most babies before 1900). What’s more, my friends counsel, there’s no better advice on how to live longer than to quit smoking and buckle up when driving. The lesson: 

Advice doesn’t have to be complicated to be good.

Some dieticians have claimed that their clients don’t follow the plan as it appears too simple and obvious, so they introduce certain special “super foods” to make it look fancier. But I believe financial advisory is the most impacted service, infamous for complex advice and jargon. 

A research paper titled “The Confounding Bias for Investment Complexity” states that “a preference for complexity is almost hardwired into investors, their agents, and asset managers because the intuition is that a complicated investment landscape requires a complex solution; a complex strategy also supports a higher fee from both agents and managers.”

It is not sexy to focus on things with long-term results, which requires immense patience and discipline. Simple things: 

• Goal-based asset allocation
  • Minimum/ no debt
  • Spending less than you earn
  • Risk planning for unforeseen events
  • Making a Will for legacy planning

These sound boring compared to the conversation around trends in cryptocurrency, algorithm-based trading, the next multi-bagger, and so on. Unlike the former, these discussions are action-oriented and exciting, making us believe we are doing something to enhance wealth. 

While there is no right and wrong, the important thing is to understand what works for you and what is just a fad that does not or might even work against you.

“I have found that all ugly things are made by those who strive to make something beautiful, and that all beautiful things are made by those who strive to make something useful.” ― Oscar Wilde.

Of course, the world is complex, and there is even a term coined to reiterate this – VUCA, which stands for Volatility, Uncertainty, Complexity, and Ambiguity. We see so many things happening around us – war, inflation, interest rate hikes, and unemployment, among others, which impact our investments directly. The key is not to react but to follow the process and plan, which is simple and created free of emotions (resulting from short-term events), looking at the big picture. Dutch scientist Edsger W. Dijkstra said, “Complexity sells better.” but it might not be something that will always work for you.

Let’s strive for simplicity rather than adding to an already complex world. Create a simple plan and process that helps in achieving your goals. As Steve Jobs said,

“Simplicity is the ultimate sophistication.”