What is more powerful than financial knowledge?



"Lethargy bordering on sloth remains the cornerstone of our investment style." 
– Warren Buffet, 1990 Berkshire Hathaway shareholder letter

The markets took a beating last week for various reasons. For some, it was an emotional roller coaster while for others it was an opportunity. Despite what your fundamental or technical analysis says, it’s merely a calculated approximation of valuations at the end of the day. That’s why there are no guaranteed investments.

We Lazy Investors accept that:

We can’t guess the direction that prices of individual stocks or funds with any degree of accuracy.
We can’t predict the direction of the market. No one can.
Buying in and out of investments on a frequent basis really cuts into returns over time.

The above statements even apply to the professionals and the so-called experts. Getting so much information can also affect one’s mental health. When you begin to chase returns, there is a high chance that you become consumed by your own bullshit, bias and even greed to the point that it blinds you to the risks you take.

In personal finance and investing, our decisions tend to be very much emotional. One way to cut through emotion is by building habits.

So, if knowledge is power, then what is more powerful than knowledge?

The answer is HABITS. Just like any goal, getting your finances stable and becoming financially secured requires the development and deployment of good financial habits.

I’ve been researching this topic extensively in the last few years in my quest to eliminate debt, increase my savings and increase income.

Great things come from small consistent steps. If you can’t save an amount of 10 of your currency, then what more 50, 100, 1000? A disciplined yet consistent approach is key to success in the investment world just as it is a key to success in life. The same thing goes for expenses, the small accumulated expenses are what holds you back from having savings for investing.

Recently, I discovered that I can still be lazy while being productive; how? By establishing habits or routines. Our brain can be hardwired to do things in a sort of ‘Autopilot’ way.

To drive this point further, we can simply use the example of purchasing some ‘cigarettes’. You know that cigarette smoking is dangerous to your health (even the company declares this disclaimer) and yet some people buy it anyway. Why? You definitely have the ‘knowledge’ and the decision one makes is your power but a purchase still happens. Because one’s habit can influence or even bypass your knowledge for various reasons or excuses that you tell yourself.

The same can be said with other buying behaviors. Do you really need to buy during a sale? Do you really have to always buy and drink designer coffee? And so on and so forth. It all begins and ends in your mind. What you give power to, has power over you. Habits of the mind can determine almost anything in life.

Ultimately it is your habits that make it hard to get out of debt, save for retirement, or break out of a living from salary-to-salary. We must, therefore, develop new, positive, healthier habits to replace it.

Once again, habits are more powerful than knowledge. Habits are also a lazy person’s way to make execution easy and effortless...not at the beginning…but eventually in the long run.

Everything is difficult until it becomes easy. Perhaps it is time to audit yourself and ask: What bad habits do I need to stop immediately? What good habits do I need to start building or doing?


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What is more powerful than financial knowledge? What is more powerful than financial knowledge? Reviewed by vernon go on Thursday, March 29, 2018 Rating: 5

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