Focus on What You Can Control

“Incredible change happens in your life when you decide to take control of what you do have power over instead of craving control over what you don’t.” – Steve Maraboli

While it can be interesting and thought-provoking to debate and complain about the politics in this country, on a personal level it doesn’t really affect your finances on a daily basis. Sure, the taxes that you pay can be changed and that could hurt your bottom line in a small way. But spending your time complaining about this type of thing isn’t going to help you see any real progress.

In fact, it’s not only politics that are mostly unrelated to your successes and failures with your finances. There are a host of other topics that have almost no bearing on the attainment of your saving and investment goals. Spend a little less time focusing on those things which you have no control over and more on the decisions that have an actual impact on your overall financial well-being and you will save yourself tons of time and stress.

I’m going to go through six areas that people spend way too much time complaining about and thinking they can control along with a corresponding activity that you actually do control and can spend more time focusing on.

1. No Control – PoliticsApproval ratings are at all-time lows for most of our politicians. Their negotiating tactics leave much to be desired, especially in the last couple of years dealing with the debt ceiling, sequestration, etc.

And while it can make for interesting conversation to debate the minutiae in politics these days, it will have no bearing on your finances and even less than you think on your daily life. Matt Taibbi at Rolling Stone said this on the day of the most recent presidential election:

“For most of us, our day-to-day lives won’t change a lick no matter who wins tonight. If we just turned off our cable channels and stayed off the net, it would take months, maybe years, for most of us to guess who won.”

Pay attention to politics to figure out how you will vote and focus on state and local issues. But for your financial well-being politics matter very little, especially within your investment and savings decisions.

You Do Control – Setting Goals: I feel like Tony Robbins telling you to set goals but it helps. Don’t spend as much time coming up with numbers and forecasts for your goals. Focus on the “why” for each goal.

Why do you need to save for retirement? Why do you need an emergency fund? Why do you need to make more money? Most of these deal with having freedom from stress and from making tough decisions. Write down your goals and revisit them on a yearly basis to make sure the “why” hasn’t changed.

2. No Control – Taxes: It’s obvious that our tax system is too long and complex. 75 years ago the instructions to fill out your Form 1040 were 2 pages long. Now they run 189 pages. In the last decade alone there have been almost 4,500 changes to the tax code (that’s more than one a day). And the U.S. tax code is now 3.8 million words long.

How does this affect your finances on a daily basis? Not much really. It can be cathartic to vent about our tax policies and the politicians that make them but you really can’t control how it all shakes out. And you have much more important things to worry about than how the tax code is going to affect you. If it does change, we adapt and move on.

File your taxes every year and make use of the benefits you receive through tax-sheltered accounts such as the 401(k) and Roth IRA. Those things you can control, but not tax policy.

You Do Control – Learning to Keep Your Emotions in Check: Put your finances on auto pilot. Don’t allow fear and greed to take over your decision-making process. Take the time to make an investment plan that you will stick to through thick and thin. Have processes in place that force you take make systematic moves not based on how you are feeling on a particular day or based on the movements of the markets.

3. No Control – The Economy: It’s nice to hear that the economy is doing well when you turn on the news at night. But the data points that they give are mostly meaningless to you. Economic data get revised, and then revised again and again (some actually for a number of years). There are seasonal adjustments and changes to the way they calculate the data.

An old economic joke (there obviously aren’t many of these) goes that economists have called 9 of the last 5 recessions. Sure the broader economy affects the business cycle but it’s nearly impossible to use that information to make investments on a consistent basis. And we’ve seen that stocks and the economy don’t necessarily follow the same path.

You Do ControlYour Career: Spend more time looking for ways to improve your career. This could include networking with other professionals in your line of work, going to conferences and seminars, or just sitting down with your boss to make sure you are doing everything you can to help the organization and improve as an employee.

Even taking out a colleague to coffee every once and a while can improve morale and help your understanding of what they are dealing with on the job.

4. No Control – The Stock Market: It’s funny when you hear a news outlet give you a headline as to why the stock market was up or down on a particular day. How do they really know why it went up or down? A recent study found that 75% of the time there is no rational explanation for big moves in the stock market, either up or down.

The stock market is a collection of individuals, portfolio managers, mutual funds, institutional investors and more. Do all of their goals line up exactly on the same day? Of course not. There are infinite reasons why one party is buying and another party is selling on any particular day. Here’s an honest headline that the authors at the Freakonomics blog would like to see some day:

Stocks Surge, Reasons Unknown; May Be Nothing More Than the Random Fluctuation of a Complex System.

Don’t look too deeply into the stock market’s moves, especially in the short run. It will likely make little sense and you have no control over the emotions of the crowd anyways.

You Do Control Asset Allocation: This is most important investment decision you can make. It helps shape the risk profile & time horizon of your investments. You can really learn who you are as an investor through your asset allocation (hopes, fears, biases, tolerance for loss, psychology).

5. No Control – Your Investment Returns: Stocks have earned about 8-9% a year over the very long-term. But that doesn’t mean that it’s a straight line up every year. You don’t just punch in on January 1st and collect your 8-9% a year later. Since 1928, the Dow Jones has increased more than 10% in a single day eight times, declined more than 10% in a single day four times, and gone either up or down more than 5% in a single day 136 times. The typical returns are all over the place.

Take a look at the past 13 years of annual S&P 500 results: 16.00%, 2.11%, 15.06%, 26.46%, -37.00%, 5.49%, 15.79%, 4.91%, 10.88%, 28.68%, -22.1%, -11.89%, -9.10%. So, while it would be great to earn consistent returns year in and year out, the whole risk-reward relationship doesn’t work that way.

Plus, who knows if that 8-9% a year will remain in the future. In fact, a good argument can be made that returns will be lower going forward. No one really knows. The lesson? Don’t expect to control your investment returns or they will control you.

You Do Control How Much You Save: This will have a much larger impact on the size of your net worth. And you get to control the amount you save each and every year. Start early and let compound interest help you along the way.

6. No Control – Short-Term Movements in Individual Stocks: If you think the overall stock market fluctuates just imagine what all of the individual stocks that make up the market can do on a daily basis. When you invest in an individual stock here are just some of the factors that can move the stock on a particular day: earnings announcements, revisions, future outlooks, analyst opinions, the company’s industry, competitor’s results, input prices, rumors, fear & greed, supply & demand, and I could go on.

Just know that there are so many working parts that the movement of the price of one stock will probably be very nonsensical on most days. Even if you are correct in your analysis other investors may not agree with you over the short-term. The control is out of your hands here and it lies at the feet of the collective market and its participants.

You Do Control Costs: It’s simple really. The more you trade the higher your transaction costs will be. The average expense ratio for an actively managed large cap mutual fund is about 1.30% a year. An S&P 500 index fund has an expense ratio as low as 0.10% per year. That’s a big difference to make up in performance each year through stock picking.

A 1.20% difference doesn’t sound like a lot but over 30 years $10,000 grows to over $60,000 at 6.20% a year vs. only $43,000 at 5.00% a year. Keep it simple and keep your costs low by investing in index funds and limiting your transactions.

Of course, it’s no fun to focus on the things you can control. They are mostly long-term in nature and relatively boring when compared to blaming politics or the economy for all of our own problems. But get these decisions right and you can spend all the time you want debating the latest tax or spending policy that probably won’t get passed anyway.


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  1. What Are You Focusing On? - A Wealth of Common Sense commented on Jun 01

    […] and thousands of variables that we have to consider. I have discussed staying in your lane or focusing on what you can control in the past but I feel this is a topic that needs to be addressed every once and a while especially […]

  2. Celebrating 10 years at Financial Symmetry along with a Few Lessons - Financial Symmetry, Inc. commented on Feb 23

    […] 4. We have no control over the stock market-I knew this in theory when studying Finance in college and through the CFP® coursework, but it became painfully obvious in 2008 and 2009. Fresh off of earning my CFP® and beginning to work with clients I found myself counseling people about why their portfolio had lost so much value, how are they still going to retire, and what would happen if they were laid off. It was a trial by fire and it benefitted my career tremendously. Financial planning is about much more than choosing the right investments and rebalancing portfolios. It is about real people with real goals, dreams and fears and managing money in an imperfect world where there are no guarantees. This is not always comfortable and making the right money moves doesn’t always feel good. This is why the average investor typically underperforms the funds they invest in and it is also why sticking to a diversified strategy wins over the long term. In times of market exuberance or panic it is important to take the focus off of what the market is doing and focus on what we can control. […]