Resisting the Investing Sirens

23 May Resisting the Investing Sirens

In the epic poem The Odyssey of Homer, Ulysses is sailing home from Troy and he’s warned of the dangers of sailing past the island of the Sirens. Their singing is fabled to be so compelling to sailors that – unable to control their rapture – they jump overboard to their deaths.

Ulysses wanted to hear the Sirens’ song, but more importantly, he wanted to live to tell the tale. So, he devised a cunning plan. He asked his crew to bind him to a mast with ropes and they had to block their ears, so they couldn’t hear the songs.

We’re constantly bombarded with ‘the Siren’s song;’ from pundits and the media, to the next-door neighbour who’s always talking about how great their ‘investments’ are. The allure of high returns can be hard to resist, but perhaps we can take a leaf from Ulysses’ book.

First, unlike many before him, Ulysses recognised that he was fallible. So, he engaged the help of a competent third party – his crew. In a sense, this is one benefit of having a trusted and competent professional planner. Author Carl Richards once noted that ‘a financial advisor is the only one standing between you and the Big Mistake of buying high and selling low. You’re hiring them to do what you can’t: make unemotional decisions about your portfolio.’ The reality is that, when it comes to money-related issues, our emotions often cloud our judgement. A trusted professional’s role is to help us make an informed decision.

Another lesson from Ulysses is the role of the mast. By having his crew bind him to a mast, he had a real plan in place that stopped him reacting to a dangerous temptation. At Tandem, we craft a financial plan for our clients. Hopes and dreams are great, but a financial plan is a roadmap to achieving those dreams. It provides an anchor in difficult times. A financial plan also provides a sound basis for how and why we invest. It enables us to filter out inappropriate investments that we might otherwise find tempting.