Picture Credit: Ron Mader || Humility is underrated. Without it everything is a fight.

“Size expectations to resources and you will rarely be disappointed.”

I would think that this one would be “common sense,” but I have another saying, “Common sense isn’t.” Many people engage in magical thinking, overspending and assuming that things will work out in the end. Under most conditions, it does not work out in the end.

Living in reality is a key to happiness. Delay gratification, have a buffer, and invest for the future. What could be simpler?

You might or might not be surprised at how many let short-term pleasure dominate over long-term well-being. I think it is hard if one is single to have the gumption to think long-term. There is a temptation to play when there is no one else relying on you.

The lessons of the Great Depression have been lost. Be self-reliant, or family-reliant.

Patience and humility are underrated virtues. Perhaps it seems like those who are proud and impatient do better, but that’s just the unequal signal problem. What’s the unequal signal problem, you say? Those that publicly succeed get more notice than the many more that privately fail because they offend others with their pride and impatience.

I’m not saying don’t take moderate risks to improve your position in life. I am saying that trying to hit home runs begets a lot of strikeouts. If you are not capable of bearing the losses of strikeouts, don’t try to hit home runs. Instead, try to hit singles more reliably.

This is one reason why I say to diversify. Here’s something I haven’t said before, but when I was a kid, I used to read Value Line. They would talk about cash as a diversifier, and highlight stocks that were growth at a reasonable price, and had momentum of earnings and price. It’s good to keep short bonds (cash) on hand for the opportunity to invest at lower prices when they become available. Or, to use the cash in an emergency, because you can’t always be sure of future spending needs.

Investing in stocks requires patience. Holding cash (short bonds) requires humility. With patience and humility you can take on the markets and not worry much about the future. You know you can hold your positions. You know you can meet surprising cash needs. You are ready for anything, because you have enough slack in your asset allocation to hold onto your risk positions under almost all circumstances.

For me, humility meant paying off my mortgage debt early, even though my investing was going well. My investing went well because I didn’t have to worry in market downdrafts about how we would live. Really, I haven’t had a significant personal economic worry in 18 years.

Patience for me meant slowing down buying and selling stocks. Hold them longer. Think harder about the purchase decision. Business plans take time to develop. Owning stock is owning a business. Real success comes over time, not by day-trading.

And, find happiness where you are. Retirement can be fulfilling even if you don’t have a lot of assets. Find work that isn’t too taxing, and keeps you in touch with others. Having purpose in life aids happiness. Then use your assets carefully to aid your life over the long haul. Remember that longevity is a risk, so don’t overspend.

Does this sound hard? Yes, it does. And that is our lives. Humility helps at this point, realizing that growing old isn’t easy. But if you size your expectations to your resources, it will be easier, recognizing that you did your best, and that you are getting a reasonable living in your old age.