The following article first appeared on RBC Direct Investing’s Inspired Investor content hub on May 24, 2018.
Just like Goldilocks, we all seek — consciously or unconsciously — products and experiences that are just right. But the aptly named Goldilocks principle doesn’t just apply to your morning coffee. In astrobiology, the Goldilocks zone is the habitable area around a star where the temperature is just right for sustaining life. In medicine, it can refer to a drug that strikes the right balance between effectiveness and unwanted physiological effects. And in economics, a Goldilocks economy is warm enough to keep a recession at bay but cool enough to stave off major inflation.
Just like Goldilocks, we all seek — consciously or unconsciously — products and experiences that are just right.
What does this have to do with investing? A lot, actually. Because the Goldilocks principle also plays a part in the way our minds work and how we stay motivated.
For DIY investors, the Goldilocks principle means setting goals that are high enough to be challenging and exciting, but not so great that results are beyond reach. It means choosing financial products that fit with your objectives, but also allowing time and market forces to help push you along.
We want to be challenged, but we get discouraged when we’re completely overwhelmed. And yet, the path to success — personal, vocational, financial — is almost always a steep one, with potholes, setbacks and difficulty. So what is the key to staying motivated and focused, in spite of the struggle?
The key is Goldilocks. Scientists know that people experience peak motivation when the task at hand is just difficult enough to be challenging, but not completely beyond our abilities.
Putting Goldilocks to work in your own life needn’t be complicated. If you want to run a marathon, it means breaking your training down into smaller, more attainable runs as your endurance grows. If it’s a new level of career success you’re seeking, planning a step-by-step attack and building your skills and talents will help you progress and stay motivated.
Finally, don’t forget to the time to look back and see how far you’ve come. Measuring your success at regular intervals will help you stay fired up about the future and visualize your ultimate success. Here’s to finding what’s “just right” for you!
Inspired Investor, RBC Direct Investing’s content hub, made its debut last spring on the RBC Direct Investing website. Featuring personal stories, timely information and expert insights, Inspired Investor offers clients inspiration, investment learning and how-tos – with the ultimate goal of empowering self-directed investors through content that connects with their everyday lives.
Visit RBC Direct Investing to find out more about self-directed investing.
RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2018. All rights reserved.
The views and opinions expressed in this publication are those of the writer. This article is for your general interest and does not necessarily reflect the views and opinions of RBC Direct Investing. Furthermore, the products, services and securities referred to in this publication are only available in Canada and other jurisdictions where they may be legally offered for sale. If you are not currently resident of Canada, you should not access the information available on the RBC Direct Investing website.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.