First, let me welcome you to our blog. We will periodically write about topics of interest including investing and financial planning as well as other topics which may be on our minds like economics, education, and sports. As we begin, I wanted to bring education and investing together which may help you, our reader, understand our philosophy on investing and financial planning. The first group of blogs were posted on our old site and written in 2013 and 2014. This blog was originally written in November 2013.
My son is four years old. Living in Manhattan, we are mired in the process of finding a Kindergarten for him. As many of you have heard or otherwise know, this can be a harrowing process with all the choices available between public schools and independent schools. Our family has decided to go the public school route, but this only simplifies the process slightly. In getting acquainted with school, we recently attended an open house for one of the schools. Great school, our kid would love it, but as you might expect, there was one of those super Type A parents who had eighty questions, dominated the conversation, and attempted to intimidate teachers, administrators, and parents with his presence.
This parent asked a question about whether or not the curriculum was more successful at getting children into Harvard and Yale or Dartmouth and Princeton. What would you think if you heard a parent asking this question at an open house for a Kindergarten? You might think that he was overbearing, at minimum, for trying to manage the minutiae of curriculum (for a school his child is not yet a student at) to get his child into a particular college 13 years from now!
Here is where my family and this gentleman differ. First we started planning and researching for our child's education early. We were aware of many of our options years in advance and started discussing them. We considered costs, quality of education, and quality of community in our decisions (and will continue to do so until the process is finalized). However, we recognize that there are only so many things we can control. We can control where we live, but we cannot control how our son might do on an entrance exam. We can read to our child, but we cannot control whether our son will be able to interpret Shakespeare at age six. To try to do so would likely be an enormous waste of time and resources, as well as making our whole family unhappy.
Here's where the parallel to investing comes in. So many of us, individuals and professionals, try to control how our investments will turn out. We try to buy at the right time, sell at the right time, and pick the right stocks or sectors to invest in. The truth is, we can't do it. We can only control what we can control. When it comes to investing, what we can control is the risk we are willing to take on and how long it will be before we need the money we have invested. Much like I cannot control my kid's talents and abilities, as investors we cannot make our investments go up (or down). So we give voice to those things we can control. Wasting psychic energy on other factors is folly and usually counterproductive.