“New beginnings are often disguised as painful endings” – Unknown

The above quote is what the insurance industry is built on.

Think about it. Whether it is your house insurance, car insurance, phone insurance, health insurance, or even life insurance, an insurance only becomes valuable to the insured when there is a painful ending and tries to soothe that pain with resources (an opportunity) for a new beginning. However, no matter the value of the insurance, what is lost in that moment is lost and what comes after comes after.

The insurers use a probabilistic approach to assess the risk of that painful ending and then set a premium (which is their own investment insurance) that assures a new beginning for them.

The rationale is – painful endings always occur. With insurance you prepare for a new beginning.

By all means, get insured.

But more than that, use what the insurers use in your own dealings. Take a probabilistic approach to assess the risk of a painful ending and then set a personal premium (which is your own investment insurance) that assures a new beginning for you.

Premiums are paid at a regular intervals without fail. They are raised when risk increases and rarely lowered, even when risk reduces.

Pick a routine for saving/investing and hold yourself accountable to it. Invest daily, weekly, monthly, quarterly or yearly.

Pick an amount to save/invest and hold yourself accountable to it. Raise that amount as your income increases. Increasing income is a sign of increasing risk. Raise your investment premium accordingly.

For ease in approach, I apply lessons from meditation, finance and Ulysses (aka Odysseus).

Meditation is done daily – I save/invest daily. Find a way to automate it if you can, but save/invest daily. It will keep this behaviour top of the mind and influence your daily action. If you can spend daily, you can save/invest daily. Match the habit of spending with the habit of saving/investing.

Finance drills everything down to percentages and timelines – save/invest using percentages and fix an end date.
I like starting savings/investments at 20% of income. Why? The pareto principle – “80% of the output from a given situation or system is determined by 20% of the input.” I decide the 20%.
I like a timeline of 33 years. Why? That is how long it took Jesus to complete his work. No investment should require longer, before a new beginning. It is relatable to me. And I use what is relatable to my advantage.

I apply what Ulysses did with the Sirens. Learn the art of doing nothing after saving/investing. Leave your savings/investments alone. Resist the urge to go to them. Put up blockers to your action. Set up the system in a way that blocks your future self from acting.

Note that I have not talked about returns. That is a subject for another article. For now, remember that in the probabilistic approach, it is not returns (outcome) that leads decision making, but management of risk (protection of value).

– Osasu Oviawe