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Find your North Star

May 12, 2022

The Northern Star has long been a symbol for weary travelers the world over, as a guiding light on their journey of discovery.  In many times of peril, the Northern Star is a symbol of hope and provides a sense of calmness.  What makes the Northern star a guiding light?  Well, because it’s so close to the celestial pole, it traces out a very small circle over 24 hours.  The Northern Star always stays roughly in the same place in the sky and therefore, can be a reliable way to find the direction of north.  It’s earth’s compass that always points true north. 

 And that got me thinking:  Do investors have a Northern Star?  Especially in 2022, where it seems like on a daily basis we are bombarded with the bad news. 

 I’ve had many conversations over the last few weeks, and the overwhelming question from our clients is “What do we do now?”.   I would simply ask you to get your compass out, and find true north, and make sure you are headed in that direction.

 What is true north for an investor?  Simple – It’s a Statement of Financial Purpose. 

 In order to pursue your financial goals, you have to know where you want to go.  In fact, figuring out where you want to go has to happen BEFORE you set any goals.  When you have a Statement of Financial Purpose (your true north), it may keep you from getting lost on your financial journey.  You’re likely to face many obstacles, and having a Statement of Financial Purpose may help to keep you focuses on what’s important.

 Too many times we get caught up in the debate as to what direction the equity markets are headed and measuring the political climate, that we lose sight of where we want to go.

 For example - If I’m going to take a trip, the particulars of how to get there, i.e. by plane, train, or automobile is important, but they are not my northern star.  My northern star should be established even before I decide where to go.  My northern star should be WHY I’m going on the trip in the first place.

 Set about 20 minutes aside and ask yourself these important questions: 

 What’s Important about Money to you?  What do you hope to accomplish with it?  What is your money legacy going to be to your heirs?  How would I describe a life well-lived? 

 When you answer these questions, you may find that your goal could be a multi-decade retirement, in which you are free from the daily stress of working. Spending time with those whom you want, for however long you want, doing what you want.   

 Understand that discovering why money is important to you can be much harder than it seems.  If you need some help getting started, have a conversation with your spouse, a friend or a financial advisor.  Uncovering purpose means asking yourself those hard questions.  Based on your answers, you can begin to form goals and from your goals you can develop and implement strategies.   

 Think about what will happen between today and three years from now for your life to reflect more of your Statement of Financial Purpose. 

 When you find your own norther star, it could help guide you through the normal, but sometimes scary ups and downs that the equity market invariably go through.  It will keep you from turning temporary market fluctuations into permanent losses.  Creating permanent losses from temporary losses is a behavior that can damage and threaten a multi-decade retirement. 

 It seems to me that when you create a Statement of Financial Purpose, you’ve instantly created your own North Star, and in times like these, it can be your bedrock, which gives your life’s financial journey purpose and meaning. 

 If you need help creating your own Statement of Financial Purpose (your northern star), reach out to us.  We’d love to help you!

 Thanks for reading!