Of all the phrases in the financial planning world, “I don’t know” may well be the most powerful.
There are other phrases like “it depends” that are similar, but underlying them all is the fact that we are trying to make money decisions without a great deal of certainty. The reality is that we just don’t know what the next five, 10 or 20 years are going to look like.
Sure we can model it based on history, but that would just be a model. One of the most dangerous things I see in the investment and financial planning world is a false sense of precision.
In fact, I think there is a tremendous sense of freedom that comes with recognizing that we just don’t know what the future will look like. At that point, the process of financial planning becomes about making the best guess we can about that future. Then we consistently course correct as we go, before we get too far off track.
Read it all and thank me later.
The illustration used on the front page for this piece is also by Richards. More information on his artwork is available here.