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.
Bonny Reichert
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.
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