Just Keep Doing It – Mental Qualities Runners Have That Investors Need

Alice is training for a race so she runs in the early mornings. But last night she couldn’t stop watching Mad Men, so she only got to bed at 1am. She felt dreadful when she was tying her laces at six this morning – but she’s feeling great now, because she did it.

There are two separate decision-making systems in our brain. They’re both designed to help us make decisions which will bring us pleasure and avoid pain.

Your instinctive decision-making system is interested in the here and now (bed is cosy/ running will hurt). It’s always ‘on’, so it kicks in immediately. Your analytical system is the part of your brain that thinks things through. Unfortunately, its default mode is ‘off’, so you have to consciously turn it on to override your instinctive reactions. You click it on to work through a spreadsheet, put a report together, or to remind yourself the reasons why you’re lacing your running shoes at six in the morning.

Obviously, what’s pleasurable in the short term isn’t always best for you down the line. And decisions that seem tough now can produce outstanding results later. That’s why these conflicting decision systems so often get investors into trouble. Everybody knows that you need to buy assets that are cheap now so you can sell them for more money later. But human instincts shy from low prices (keep away from those!), and are thrilled by rising prices (get some more of that!). So executing a profitable long-term investment strategy requires many of the same mental qualities needed to stick to the healthy discipline of early morning runs.

Runners use a number of strategies to get themselves on the road:

– They make it automatic 
Runners schedule specific times to run, on specific days of the week. Since we all find pleasure in productive routines, this “reprograms” the pleasure/pain instinct. Getting up to run feels good now, not bad.

– They know a lot about it. 
Humans get a great deal of pleasure from knowledge. If you’ve ever met a runner, you’ll know they can talk for hours about the art and science of running. Most runners proudly own a small personal library of books about running. People like doing things they know a lot about. This keeps runners running.

– They focus on the excellent long-term benefits 
A quick Google search reveals dozens of forums dedicated to listing and explaining the very real physical and mental benefits of running (101 Reasons to Run, Running’s Great Life Lessons, and so on). Articulating these benefits “turns on” the analytical part of the brain, overwhelming the instinct to stay in bed.

You can use the same techniques to keep your investment life on track. Dollar Cost Averaging is a highly effective, tried-and-tested investment methodology that does exactly that. Used properly, it will optimise the impact of your monthly savings on your long-term financial wellbeing, so you:

– Make your investment inputs automaticĀ 
– Know a lot about itĀ 
– Understand the excellent long-term benefits.

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