Preparing for the Long Game: Investing
I had braces when I was 11, and I remember how excited I was to get those shards of aluminum glued onto my teeth. Since I was 8, I was unbending paperclips and molding them to my upper teeth to wide acclaim from my peers. Did I care that my braces would initially require a candlestick length of wax to not rip my mouth open for the first week? Nope. Was I grateful for the large expense my parents shelled out? No. Was I concerned about spending hours picking corn and orange flotsam out of my face? Nah. All I cared about was the immediate social benefit: HAVING BRACES = COOL.
I had no awareness of what I would now call the Long Game – achieving a lifetime of straight, healthy teeth and a beautiful smile. However, one thing the pre-teen-me was confident about was the short game; social acceptance. The short game rules the roost
In a weird way, this got me thinking about the psychology of investing.
The business of investing – whereby an investment firm or bank markets their service to the public - is a focus on long term time horizons and anticipated annual returns. Unfortunately, long term time horizons and annual returns are not sparkly and exciting. It’s much harder to focus on the distant horizon.
Perhaps this is why we see so many investment commercials that go for the emotional impact (like the Fidelity commercial: girl grows up, has baby, loses loved one, swings child on beach, watches child graduate from college, cue tears.) Wall Street also brings shame, fear and greed to the party to get us to play their game. But it’s not working: women control 87% of household and business purchasing decisions, yet women control only 22% of the investment decisions. So why the disconnect?
If we aren’t experiencing some social or short term benefit when making an investment, it becomes harder to maintain consistency over time.
According to a study called "Harnessing the Power of the Purse: Female Investors and Global Opportunities for Growth," co-authored by Andrea Turner Moffitt and economist Sylvia Ann Hewlett at the Center for Talent Innovation, women desire a financial return, but we are also seeking a social return with our money. Of course, this is true for many men as well.
Remember our first WealthWise exercise, Empire-ing? Our future self shows our present-self our ideal end game. What did I create; what change have I invoked; what have I built and invested in?
Creating an investment strategy that has a positive impact with a good long term rate of return is exactly what we are building with our Empire-ing.
What is a Positive Impact?
An impact investor is seeking to create a better world by investing funds directly into programs, ideas, technologies and people that are influencing real change. These impacts may be social, spiritual, local, or educational. Some of these investments are categorized as Alternative Investments, and may be part of a fund, some impact investors focus on public companies that are creating change on the planet. There are funds called Socially Responsible Investments that invest in private (or public) issuers that build infrastructure in the third world, create housing solutions, or end hunger. Some funds have long term track records, some do not. Directly investing in private companies is much more impactful to the economy, because your investment is going toward the actual business or technology of the entity. It is also much riskier because your investment in a private company is not liquid, like a stock, ETF, mutual fund or most bonds, that are traded on exchanges and are required to file audited financials.
Investing with an impact and not simply a rate of return is one part of the key to sticking to your plan. Another is social. When we make an effort to come together to talk about issues, we educate, empower and build confidence. A Fidelity Investments Money FIT Women Study found that women are more confident discussing medical issues with a doctor on their own than talking money and investments with a financial professional. Our money can change the world; let’s not sit quietly!
DIVINE ASSET MANAGEMENT LLC
39 Broadway, 36th Floor, NY, NY 10006
tel 212 344 5867 fax 212 509 5867
Dani Hughes & Valerie Sanchez
Co-Creators of Divine WealthWise Exchange