Discover more from Wealthcare for Women
Incremental improvements over time... this is the way
I’ve yet to personally experience autonomous driving, where the car does the driving for you.
But I can imagine a future world where this is commonplace.
There would be fewer traffic jams, far fewer accidents, and much lower auto insurance premiums.
But we’re not there yet…
And we’ve all read stories about mishaps and accidents when we let the vehicle “take the wheel.”
But this isn’t about control, or letting go - though there’s something there to think about.
No, this is about the promise of “better.”
Think about this… self-driving cars don’t have to be perfect, thought that would be something to work toward.
In reality, self-driving cars simply need to be better than the average human driver.
But, in the words of Dave Barry,
The one thing that unites all human beings, regardless of age, gender, religion or ethnic background, is that we all believe we are above-average drivers.
For more on why we tend to think we’re above average, read this about illusory superiority.
And while driving is a very relatable example, we tend to think we’re above-average in all sorts of things including our IQ, our memory, our popularity, and our financial and investing acumen.
I’m not here to tell you I’m smarter or more “above-average” than you are when it comes to your money decisions.
But when it comes to your money, I do have one advantage you never will.
Your money isn’t my money.
Which means I can be more objective about it than you can. More on this here.
But even if we discount our personal biases, many people are still focused on the wrong thing when it comes to their money.
While we should all work to improve our financial situation over time, the best approach is small, incremental improvements from day to day.
Heck, that’s all financial planning really is… when it’s done right.
Small improvements over time.
You make the best decisions you can can based on what you know right now. And with the wisdom that comes from your own personal experience.
And then in a few weeks or a few months, you do the same thing again.
You gather updated information and details, and you once again make the best decisions you can based on what you now know.
The goal isn’t to be right or perfect or best.
It’s to get a little better every time you go through this financial planning exercise.
And though it sounds simple, it’s rarely easy.
And much, much more…
And while many people - consumers and professionals alike - attempt to beat or outperform that market - and lose a lot of money in the pursuit - most would be much better served by simply accepting average returns.
Though apparently most people can’t even do that…
What the article and chart above are demonstrating is that investors in the asset classes listed are losing almost 1.75% in returns compared to the actual returns that these investments provided.
Why is that?
It’s our own money which makes it emotional and personal and subject to our own unique views and experience with it, and
Naturally, we get scared. And fear can lead to decisions like making a temporary market decline permanent by selling out and “waiting for things to get better.”
We may think we can time when to get in or out of the markets, not because of fear but based on perceived opportunity. OK, and maybe some fear too (see #2).
Or we tell ourselves that we can pick just the right investments at just the right time to outsmart the literal millions of other market participants out there. Good luck with that…
There’s more to this story, and I encourage you to read the Morningstar article linked above.
All this to say, when it comes to self-driving cars, they simply need to be better than the average driver out there.
But with your money, and especially when it comes to investing, you don’t need to be above average at all.
You only need to capture the actual (average) returns of the investment markets over long periods of time.
And this is simple to do, if not always easy.
This approach guarantees you will become an above-average investor in light of the chart and article above.
Plus it frees up your time and attention to be more engaged in your financial planning.
As well as anything else important in your life.
All you have to do is get a little better each and every day.
Thanks for reading Wealthcare for Women! Subscribe for free to receive new posts…
Links & Things
For more on the actual safety record of autonomous vehicles, check out this recent Ars Technica article:
As some of you know, my brothers and I have been dealing with some health issues with our Mom. Which means dealing with her Medicare advantage plan. 🤦♂️ Health insurance is a maze, and I’m constantly reminded of just how much I don’t know. Which is why I have some great subject-matter experts to help. With Medicare Open Enrollment quickly approaching, I encourage you to watch this webinar that I recorded just last week with a colleague:
Related: I’ve been asked to be part of a discussion panel on Medicare planning at Caribou’s upcoming open enrollment summit.
I’m grateful to have you as a reader.
If you have any questions or an idea for a future newsletter, blog post, or YouTube video, I'd love your input.
Just hit reply - I read (and truly appreciate) every email you send.
Until next Wednesday,