Every once in a while I read books on business and investing just to give me a solid foundation to build on should I decide to go into business for myself. One of my favorite books on investments is The Five Rules for Successful Stock Investing by Pat Dorsey and Morningstar because it gives thorough explanations and isn't a get rich quick type of investment strategy. As you can tell from the title the book lays out in the first chapter five rules that every successful investor should follow and while looking over them late last night I noticed that these rules could also be applicable to self-improvement and goal setting. Yes, it turns out that investing in stocks is much like investing in yourself and done right both can pay off handsomely, only self-improvement the results are a lot less volatile.
1. Do Your Homework
Obviously before starting any goal the most important thing to do is to research how you can accomplish it successfully. Right now one of my goals is to learn everything I can about writing a screenplay as a part of my larger goal of learning all I can about making movies. It would be easy for me to rush into this and just commit a bunch of words into a word processor with some semblance of a story and call it a screenplay but that wouldn't be a good screenplay now would it? The time that you put into before setting off on your goals should allow you to have a plan of action and be more prepared for any setbacks that you will inevitably face while seeking your goal.
2. Find Economic Moats
In the book this section is referring to the competitive advantage firms have within their market but for our purposes we'll be using it to refer to your personal competition. Now not all goals will have you competing against other but some will. For instance, if your goal is to attain a certain position within a company or get into a certain school then you are going to have to separate yourself from the rest of the pack by being able to do something better than anyone else can. Even if we go beyond specific goals we can apply this rule to life in general, consistently growing and improving creates a moat that can protect you in tough times. Economic moats allow companies to be more profitable just as growth allows your life to be more profitable. If you read and engage your interests and develop new skills are you not better off in a terrible economic climate than someone who does nothing to better themselves? Of course you are because whether it's having a better resume for a job or taking the reins yourself you always know that you have value to offer. So create moats for yourself by learning new things and separate yourself from the competition. Becoming World Class at Something.
3. Have a Margin of Safety
In the book this section deals with valuation of stocks and making sure that the price you pay isn't too high. In life sometimes the price you pay for something may also be too much and leaves you high and dry when things don't work out. Just like stocks you can overvalue people too. If you are in a relationship with someone and it's not going the way you want it to then you may be paying too high of a price to be with that person. This extra cost can be physical, emotional, or just your partner holding you back from being the person you want to be. You have to be honest and evaluate the person realistically to see if they are the right match for you or just someone who was nice for awhile and has since declined in their personal value. If you come to the conclusion that the price you're paying to stay with them exceeds what you actually want then it is time to move on.
4.Hold for the Long Haul
In investments constantly trading racks up fees and taxes which will usually hurt long term growth. With goals if you constantly shift from one to the next without putting the proper amount of time into it you're also hurting yourself in the long term. Jumping around with your goals leaves your original goals done hastily or you never complete them at all. Sometimes moving on is required but often it is simply due to a lack of commitment on your part. I often had this problem when reading books. I would buy one long book and be absorbed in it for a few days and then I would hear about a topic that seemed interesting and buy a book on that. I eventually found myself with a ton of books but only a shallow understanding of each because I lacked the commitment to keep going with the book or subject. I finally decided to do something about this by selling those books I had started but weren't on a topic that I was interested in on a regular basis and then made myself get through the ones I did have a consistent interest in. Sticking with your goal allows you to reap all of the benefits that you originally set out to acquire while bowing out early is like a paying tax (time and energy invested) and not receiving much profit.
5. Know When to Sell
Ah so now we get to when it is appropriate to shift away from one goal to another. First ask yourself is it worth it to you to keep continuing your pursuit of the goal? If the answer is no then it is probably time to reevaluate things. Obviously if you have achieved what you set out to do then of course it is time to move on to something new. But if your goal was something like weight loss then you will need to maintain a healthy lifestyle otherwise the result of your goal was temporary. The book goes into asking whether your money could be invested better somewhere else and if you have too much money in one stock. This translates well to what we are trying to do with this article. Replace money with time. Could your time produce better results if it were spent another way? There are only 24 hours in a day and each of them must be scheduled accordingly and if one pursuit isn't paying you back it's fair share based on the amount of time invested then it may be time to let it go. Also, while focusing on one goal in the short term can be very beneficial, if you put all of your eggs in one basket it will hinder the rest of your growth if you dedicate too much time to it over the long haul. Eventually you will see diminishing returns in its value to your growth and can be disastrous if one thing goes wrong. If all your doing is pursuing one thing and that doesn't work out you're not left with much to cling to.
This is just a few short ideas that I was exploring based off of these rules and I believe that if you do some thinking on them of your own you can find a way to apply them to your life. Personally I like to look for advice and inspiration in lots of different ways so maybe I'll make a trip to the business section of the used book store and find other thought provoking ideas, after I finish my current reading list of course.
