You are currently viewing Do you know your Why-How-What of your investments?

Do you know your Why-How-What of your investments?

I am writing this article taking inspiration from the famous book written by Simon Sinek – “Start with Why”.

Well, we all make assumptions, assumptions about the world around us and make perceptions about the situations. These perceptions drive our choices that we make in our life, be it personal, professional or investment related etc.

We all make choices/decisions to succeed in our endeavors, be it anything of our life. No matter whatever choices we make, our definition of success could be hitting a target stock price, making a certain amount of money, meeting a revenue or profit goal, getting a big promotion, starting your own company, a bigger home, helping our kids settle well etc.

More or less all of us take same route to reach our dreams / goals. For some the first attempt is right and for some of us, we do lot of research and find out best possible choices. We gather a lot of information before taking any of these decisions.

Sometimes this gathering process is formal—like reading literature on the subject, or market research. And sometimes it’s informal, like asking our friends and colleagues for advice or looking back on our own personal experience to provide some perspective.

Regardless of the process or the goals, we all want to make educated decisions. More importantly, we all want to make the right decisions. As we all know, however, not all decisions work out to be the right ones, regardless of the amount of data we collect.

Sometimes the impact of those wrong decisions is minor, and sometimes it can be catastrophic. Whatever the result, we make decisions based on a perception of the world that may not, in fact, be completely accurate.

Whenever a decision has gone right, we all believe we knew why it was going to be right however when a decision goes wrong, we try to find blame on something external and somethings that we were unaware of at the time of taking decision.

I have a friend who invests some of his own money. Whenever he does well, it’s because of his brains and ability to pick the right stocks, at least according to him. But when he loses money, he always blames the market, government, policies etc. I have no issue with either line of logic, but either his success and failure depend upon his own prescience and blindness or they hinge upon good and bad luck. But it can’t be both.

So how can we ensure that all our decisions will yield the best results for reasons that are fully within our control? Logic dictates that more information and data are key. And that’s exactly what we do. We read books, attend conferences, listen to podcasts and ask friends and colleagues—all with the purpose of finding out more so we can figure out what to do or how to act.

The problem is, we’ve all been in situations in which we have all the data and get lots of good advice but things still don’t go quite right. or maybe the impact lasted for only a short time, or something happened that we could not foresee.

Isn’t this very true with our investment decisions?  What are we supposed to do now? How do we ensure that our investment decisions are right?

Before making any investment decision, follow this process of Why – How – What.

Start with this question Why do you want to make this Investment or why you want to save money?  Write down all possible answers like for retirement, for kid’s education, for bigger home, for a car, for a holiday, for emergency etc.

Answers to these questions will help you set the beginning of your wealth creation journey. It is stepping stone for your investment planning.

Then ask yourself How do you want to start? How to select from various options available? How much time do I have? How much I can start with? How much I can increase every year? How to check what is the risk involved in choosing the option etc.

Answers to these questions on How helps you to think, research and find out all options. This also helps you take decisions & execute them.

Then comes the last part What do I do when my portfolio return drops? What do I do if I find different alternatives looking more promising than the one chosen?  What do I do if my friends / neighbours / colleagues / relatives suggest I should try different options or a news article mentions panic situation or very exciting days ahead scenario?etc.

Answers to these questions on What will determine your success. As you are aware, human brain is very powerful yet very sensitive.  Most of the decisions taken in extreme emotional state are always irrational.  This is very true in case of investment decisions too.    As you are aware, Warren Buffett started his investments at the age of 11, however he had seen his wealth only after the age of 60.   Any investment requires time & patience to grow. Power of compounding can do wonders only if you have many years of time in hand. Emotional decisions during the course of financial journey can only bring disasters and disappointments.  If Why & How are answered very carefully, most of the questions on what ifs can be handled easily.

To be successful, patience & discipline is the key.  Get your Why(s) & How(s) clearly to avoid most of What if(s).

Have a safe& disciplined investing times ahead!!

Should you need assistance in getting your How(s) & What(s) sorted, do reach out to me at or leave your number & name in the comments section below, I will get in touch with you soon.