Managing Uncertainty

by | Jan 22, 2018

Oh, January.

The calendar New Year starts smack-dab in the middle of winter, and as much as we try to gear up and get excited about this first month, there’s something so exhausting about January. It’s cold. The bills from the holidays are rolling in. We had holidays but we don’t feel refreshed – because holidays are busy and full of obligations. It’s also cold.

Did I mention it’s cold?

Here on the west coast, it’s also grey. Those of us who have experienced many winters in a temperate rainforest know that the sun won’t be visiting us for three or four months. It’s a bit daunting.

Then, there are tax reforms like crazy right now – both in Canada and the US, at exactly the same time. Media reports from our neighbours down south are stating that their reforms are “disastrously timed” and underfunded. Our Canadian private corporations are still at sea as to how to plan ahead, particularly around passive investment income. Some economists are predicting a rough 2018 in the markets, while others are predicting continuation of the 2017 party, and Bitcoin is hitting the ceiling and then heading towards the floor. And, really, is that how much a house costs now?

Uncertainty makes us all uncomfortable, and uncertainty is really where we live most of the time, despite our efforts. The long view that starts with January can increase our anxiety, and make us jumpy. It can drive us towards poor decisions.

In January of 2016, a well-respected economist from the Royal Bank of Scotland sent a note to investors recommending that they sell everything except high quality bonds. He was wrong. That had to be quite embarrassing.

The truth is that no one can predict the future accurately. If a highly respected, educated economist who studies investments for a living can get it that terribly wrong, we must recognize that it wasn’t because he was an idiot.

It’s that we can’t know the future. If we did know the future, then we wouldn’t need to plan, or even make decisions. The map would be laid out for us, and we’d just be passengers on a train that someone else was driving. What a dull way to live life.

Even if you’re thinking, “Well, actually, I’d be kind of into that,” I’m sorry to say that this isn’t an option. Life is unpredictable, uncertain, and often terribly frustrating.

We can’t know for certain where the market is going, what the weather will be tomorrow, the exact inflation rate in the year ahead, if you’ll get that raise, if your kids will get straight As and become child prodigies, if real estate in Canada’s largest cities will suddenly become affordable, if blockchain really is the future… we don’t know. We can’t know.

There are external factors we simply cannot control, and while I think that brings a fair bit of joy and excitement to life, I recognize that not everybody is on that boat with me. It’s hard to find peace with ambiguity.

Getting There (with Planning… obviously)

The plans we create are centered around this one, seemingly simple question:

What do you Want?

We know a lot of different ways to ask this question, and we also know that it’s a tougher question to answer than most people think, because often there are things in the way.

Things like knowing what you need, what your responsibilities are, and trying to understand what is possible.

Things like being told what you should do, and how life is supposed to be.

Things like understanding how you measure up against others – truly, everybody wants to know this to some extent and it takes a great deal of fortitude to look past it.

Getting clarity around what you really want out of life, the universe, and everything is where you can find peace with ambiguity. That clarity becomes your guiding light, and the tool you use to make your decisions. It becomes more important than whether Apple or Bitcoin or RBC went up today, or if someone got snarky with you because their life sucks, or if the weather outside is frightful.

When you are focused on what you want out of the next 365 days, the next five years, the total of the 80 to 100 potential years you have, and understand how to make adjustments as both you and the world around you change… those external uncertainties become less powerful.

Of course, they’ll always impact you, and that’s where planning comes in. Once we’ve got your personal ship pointed in the right direction, the technical answers to how we navigate ambiguity become clear. The decisions you make become easier, and things like volatile weather, markets, and annoyingly vague tax reform become much, much less frightening.

Julia Chung

Julia Chung

Co-Founder, Sr. Financial Planner at Spring Financial Planning
With twenty years' experience in the financial services industry, education in personal and corporate finance, business and family law, cross border planning, family dynamics, insurance, risk management, operations management, and strategy, Julia is a powerhouse financial planner committed to simplifying complex ideas into concrete, practical application.
Julia Chung

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