The "No Idea" Approach to Investing An edict of wholesome financial conduct  The "No Idea" approach to investing is based on the view that, as much as possible, one should make decisions assuming no idea what is going to happen next. These are some basic edicts of financial planning with this view: Back to Gold Ocean! Personal money management should be grounded in the principles of conservative financial planning. Adhering to good financial planning principles reduces stress (the secret to feeling wealthy) and reduces taxes (the other secret) and provides direction as to what types of investments are appropriate. Remember that a penny reduction in cost of living is worth three pennies earned through investments (2 because a bird in hand is worth two in the bush and 1 more because investment income is taxed). "There are two times in a man's life when he should not speculate, when he can't afford to and when he can." Mark Twain  Back to Gold Ocean! The approach to investing should be as intelligent and humble as possible. Modern portfolio research has shown it possible to simultaneously reduce risk and increase return by investing appropriate proportions in carefully selected different types of assets. Diversification is intelligent. Humility in investing means that one avoids investing too much money, especially funds needed in the short term, in assets that are volatile. Given the forgoing, humility also means evaluating long term investments against long-term benchmarks. Most millionaires hold their investments six years or more. Finally, humility means not investing over aggressively in the name of avoiding taxes. Conservative investments frequently outperform! "Don't put all your eggs in one basket" "Bulls make money, Bears make money, and Pigs get slaughtered" Ancient and Modern proverbs  Back to Gold Ocean! Gold Ocean Bookstore When we stray from the "No Idea" discipline, it should be consciously, and preferably in an area which we have some expertise. Investing in ones own enterprises is frequently the most rewarding risk to take, internally if not externally. (Risk it at Business Depot!) Two thirds of millionaires are self-employed From "The Millionaire Next Door" The present peace of mind of the investor and beneficiaries is the ultimate testing ground for success. We should not over-estimate our risk tolerance; it's not worth it. But we have to invest for the future or else we'll worry! Be Here Now Remember Ram Dass and just about everyone else Back to Gold Ocean! Gold Ocean Bookstore Even if we have no idea how we can meet our long-term goals, we should go ahead and begin, even microscopically. This is called showing the heavens that you are earnest. The same principle applies to paying off debts. "I don't know what the 7 wonders of the world are but the eighth wonder is compound interest! Baron Von Rothchild Back to Gold Ocean! Gold Ocean Bookstore End-notes   Based on Characterization in "The Millionaire Next Door", by Stanley and Danko Choice of words partly drawn from " the Kabbalah of Money" by Rabbi Nilton Bonder   Back to Gold Ocean!   Did you enjoy this article? What do you think? Send your comments, queries, and feedback to layth@ibm.net.