Minimalists and Investors Share a Mindset
Thinking like an investor is the same as thinking like a minimalist — it is a mindset focused on value.
It is about stepping into a bigger way of thinking.
Value is a loaded concept — ask any economist (like me) and they will offer you multiple different and complex explanations dependent on the context of questioning.
In this instance, I am referring to what is truly important to you, what really has fundamental meaning to you. This is value.
Minimalism is all about making space for what is important to you, the things you truly value.
Investing is similar. At its core it is about freeing up funds in a smart manner and allocating them wisely into investment opportunities based on strong fundamentals, in order to have more of what you truly want and need through your lifetime.
There are many studies across the globe and more locally that study non-essential expenditure. These non-essential items are often stated to include restaurant meals, drinks, takeouts, impulse purchases, personal grooming, subscription boxes, cable, online shopping, memberships, paid apps, TV or streaming services, coffee, bottled water, etc.
I would argue that many of these items, if carefully and thoughtfully selected by the consumer, can be valuable to a consumer and are delivered by excellent companies.
But these studies usually contextualise these findings by indicating parallel statistics on the high proportion of people who cannot afford to pay their credit cards, or have any form of a retirement plan, or even be able cover an unexpected expense that is important.
Whilst more representative and useful studies on this topic across the income distribution would satisfy the economist in me, these studies do already highlight the relevant takeaway — that one’s spending should not be at the expense of an investor mindset.
And some of these expenditure categories are not so far from home.
Minimalism is also about removing unnecessary complexity. This too can be carried into one’s investing approach.
Warren Buffet is widely quoted for advocating for investing in what you know. He states (with reference to baseball, but aimed at investing): “You don’t need to swing at every pitch”.
He goes on to explain that you just need to do really well with the pitches you do choose to swing at.
My takeaway is to keep it simple, keep focused on what is important to you, that which you believe has value, and run with this.
Fortunately we have companies like Franc, that offer us not only investment opportunities that are clear and smart, but also educational resources to empower us to actively participate in these investments in an informed manner.
So, whether you are reading this and already have ample funds to get through the month and hence also to invest, or are still aiming to one day soon be able to carve out a portion of your money to invest, consider if your allocation of funds to various expenditures (or future intentions to do so) aligns with what you truly want and if you would like to or are able to free up more funds for smart investing.
You may create a certain freedom (mental or physical) for yourself in doing so.
Whatever your strategy, know that investing and minimalism is not about freezing spending or resources (this is indeed what keeps the economy moving!), but rather about spending and investing (your money, time and attention) in a way that lets your resources do the voting (as to what is important to you).
The word economics does after all come from “eco”, meaning home, and “nomos”, meaning accounts.
It is your home and your accounts. You are the investor.