It’s been five years since I started working with my financial advisers.

We meet at least once a quarter, and go through my finances from multiple angles: cashflow, risk, budget, investments and retirement planning. In that time, I’ve beefed up my insurance, set up my will, and revamped my investment strategy. Correlation is not causation, but I’ve also tripled my net worth.

Reflecting on this five-year anniversary — it’s lovely having pros I can discuss and bounce my sometimes-unorthodox ideas with. We agree on many things. However, I thought it’d be more interesting to recall some underrated things I’ve learned from them.

“Underrated” from my perspective. Some of these ideas might be basic for you, but for whatever reason, were my blind spots.

I consider these important principles now:

Don’t Let Your Optimism Make You Neglect Downside Protection

This tweet is one of my all-time favorites:

"Old guys don't understand tech."

Agreed. But young guys don't understand risk.

— Vishal Khandelwal (@safalniveshak) October 26, 2021

Note the date. It was a few weeks before the crypto market peaked in 2021. Mr. Vishal basically called the top. Within a year, many coins were down >90%. Blood on the decentralized streets. Even the hardiest of them — Bitcoin — dropped 78%, needing 2.5 years to recover.

I’m an optimist — by nature and by choice. The downside is I cling to irrational beliefs. I still have some shitcoins from 2021 which I haven’t dumped — partly as a reminder to myself; partly because there’s a dreamer in me who thinks I can sell after one final glorious pump.

Learning: Losses happen to everyone, but pros prevent losses from being catastrophic.

Protect yourself from bad trading¹ decisions by knowing your exit price. If prices fall below that pre-determined threshold, sell — even if you don’t feel like it.

Use your optimism for making better trades in the future, not clinging on to unfulfilled dreams of the past.

Protect Your Life; Protect Your Loved Ones

In July this year, I had two friends and a friend of friends who passed away. All in their 30s and 40s. Only a month after I discovered health issues of my own.

For someone constantly thinking about the “attacking” part of finance — making more money, taking risks, investing — it’s sobering. Healthy years of life are no guarantee.

Protect the downside, not just in trading, but in life.

The most important way is taking care of your health: sleep, diet, exercise. Another is getting sufficient health insurance, for if/when you fall sick. It’s not just about protecting yourself; you’re also protecting people who depend on you.

And for the worst case scenario, there’s estate planning. Write your will and document where your important assets are. So you can still take care of your loved ones after you’re gone.

No Shame In Getting Help Where You’re Weak

I love investing, but as I’ve gotten older, I’ve learned the limits of my time, energy and abilities.

Apart from Jensen Huang memes, I don’t have much interest in individual stocks. Bonds feel too complex. Real estate’s not my thing.

Digital assets, crypto — that’s what I’m passionate about. I somewhat understand NFT culture. I spend hours on blockchain-related games every week. And I’ll always love Bitcoin.

Ironically, the more you know, the more you feel like your circle of competence grows smaller. I can claim some competence in crypto, but how do I deal with other important asset classes I need in my portfolio?

That’s where my financial advisers come in. They handle all the thinking + execution around the stocks and bonds in my portfolio². We discuss portfolio allocation, rebalancing, and they propose the trades. If I agree, all I have to do is hit “Approve.”

It’s not the cheapest way, but I’m happy to pay for expertise to manage my weaknesses. It frees up time to go deep on what I’m really good at.

Lean Into Your Nature, Finance Is Personal

We spoke earlier about my optimism — my reluctance to sell. It’s not good for a trader, but it’s great for an investor. My favorite holding period is forever.

Reminder to self: Trade less. Buy more quality assets, less short-term speculation.

Other quirky traits I have that are perhaps uncommon:

• I worry very little if my portfolio drops.
• I don’t care very much about material things. (Will happily splurge on my priorities though.)
• I like giving money away.

The nice thing about my advisers is they’ve never tried to convince me to be someone I’m not. Yes, some tweaks and suggested improvements. Some points for consideration. But I’ve never felt judged or forced to do something I don’t want. Despite my initial worries about working with advisers³, I haven’t become a money manager I don’t recognize — but a better version of myself.

A good financial adviser helps you cover your weaknesses. More importantly, like any good form of leverage — they make you better at what you’re already talented at.

Personal finance involves finance, but it is also very much personal.

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Footnotes:

1. Trading decisions, not necessarily investment decisions. Arguably, there are a few investments you never sell.
2. Another way is of course to index and chill. But I do like talking to someone about my investments.
3. In today’s world of AI and worries about jobs, I think this is one area humans will never be replaced. Robots will never be able to match meaningful relationships you have with good people.
4. In the process of writing this, I received complimentary financial planning services from Wealth Vantage Advisory (WVA), a licensed financial advisory firm. For my Malaysian friends — if you’re interested to get professional money advice, sign up here for a free consultation session with WVA. If you sign up for any of their paid services, I’ll get a small reward too.

Pic from Pexels: Pixabay