In August 2005, a friend and I decided to hit the slopes of Mt Hotham, after a decent snow fall. Being carefree university students, we set out map in hand. Before sunrise we realised that our map did not match the signage and shortly found ourselves crossing an ominous bridge labelled “Devils Creek”. It was at this point, we contemplated the “Wolf Creek” movie, and after some quick flipping of the maps pages, we were back on track.
Now why do I refer to this story? Recently I read a Jordan Menlos interview with Admiral Eric Olson. In particular one of the lessons imparted was that “When the map differs from the terrain, you’ve got to go with the terrain”. But what has that got to do with financial advice?
Well think of a financial plan as a map of how you get to achieve your pre-defined goals. The terrain - well that is life. As life changes, sometimes beyond your control you have to review the map (plan) and set a new course to achieve your goals. Trying to fight the changes to stay on the map usually prove either futile or in some instances counter-productive.
Let us take for instance a couple who under advice decide to invest some money and contribute additional funds over a period of time. Fast-forward some years, and the same couple have started a family and decide to take some time off work to spend time with their new addition. Trying to continue contributing into the initial investment plan may now be a stretch and it is probably best to focus on the family rather than trying to stick to the original plan, forcing yourself down a path you may regret.
The above of course is perhaps a more docile example of a life changing event. There are at times deep impacting life changes both good and bad, that should completely change the financial map you might have previously used. These changes will likely need a completely new plan (map) to reflect your new goals. Trying to push against the tide in these circumstances will more than likely see yourself burnt.
We as humans, unfortunately, at times, hang on to our convictions even after we realise we are failing. Trying to change the map to suit our own life changes will probably be more beneficial and provide you with greater clarity. And if the old saying of “All’s well that ends well”, rings true, you can smile looking back at the journey and the changes of maps you have endured to reach your goals – we certainly did after a great day at Hotham.