The Best Time to Think

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financial decisions

The best advice anyone ever gave us was to plan our next holiday while still enjoying the current one. There are a bunch of reasons for this. But the main one is that we make the best decisions when we are relaxed and happy.

This comes to mind for us as spring has sprung, the days are getting longer and the flowers are starting to bloom. Sunny days are known to be mood enhancing. We have discussed this previously – specifically the research by two American researchers named David Hirshleifer and Tyler Shumway, who analysed the one-day returns on 26 world stock markets between 1982 and 1997. They compared these returns with the morning weather each day in the exchange’s host city. And they showed that, when the weather was sunny, share prices were more likely to rise. If the weather was cloudy, prices were less likely to rise.

So, good weather makes for good investment returns. But it can also make for better thinking more generally. Scientifically, sunny weather has been shown to improve people’s memory, as one example. It has also been shown to improve attentiveness in people who have ADHD. Another study found that the absence of sunlight was related to cognitive impairment.

Anecdotally, we reckon that these positive effects tend to diminish when the weather is not only sunny, but really, really hot. That’s why we thought we would write this article in spring, when the sun is warming us but things have not yet become too warm.

Put simply, spring is a really good time to make any decisions that benefit from (i) a clear head and (ii) a positive mood.  Financial planning is very much that kind of decision making.

Remember, financial planning is not just about whether to get life insurance and where to invest your super. It covers every element of your life that either affects or is affected by your finances. This is a broad category. Whether and when to work, for example, is a financial decision for most people. Where to live, and even with whom, is also a financial decision. Whether to get married, have kids, send those kids to private schools, stay married, etc, are all decisions that are better made when you have a good understanding of your finances. When to buy a car, when to sell your boat, even whether to join a gym and optimise your health is a decision that affects your finances.

And, of course, where to go for your next holiday is a financial decision as well!

So, this spring, why not carve out some time for thinking. Even better, why not give us a call and make a time to come in for a chat. A time to ponder the obvious and the not-so-obvious elements of your financial plan. To think as broadly as possible so that you can be sure that your money is working for you, and not the other way around.

We will even do our very best to make sure that the sun is shining on the day we see you!

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