At first glance, it may not seem like there is any connection between investing and spirituality. After all, investing is about knowing how to become better investors by creating wealth and not achieving a deep connection with the divine.
On the contrary, the dichotomy is the very reason that makes spirituality in investing a fascinating aspect of the study. Investing is about profitability, where the outcome of the trade is tangibly measured to the last rupee. Therefore, it is common for investors to be overwhelmed by the sheer nature of investing and its ultimate value, which can impact their emotional and cognitive facets. More so if they find themselves divorced from spirituality.
On the other hand, investors who can trace that deep connection to the divine can benefit from this unusual window of opportunity. Moreover, these professionals can develop their skills to become better investors when these individuals are more connected spiritually. Let’s understand this with an example.
Given the current condition of the stock markets, Rahul faced the question of whether to invest in mid-cap and small-cap funds. Since the markets are unpredictable, it was challenging to take a call on how long the conditions will prevail.
Now connect this situation to where Rahul has not even begun saving for his retirement kitty and is in his 40s. According to calculations, he would need around Rs 75,000 monthly to sustain his current lifestyle.
These are some of the most common questions that plague investors. The response to these questions highlights their thinking about investments in general. While the first predicament focused on decisions that would help Rahul and people like him become better investors, the second question of retirement saving concentrated on finding solutions to financial issues through wise investing.
In both these questions, a deeper spiritual aspect helps individuals become better investors by simply knowing themselves. In both questions, there is a quotient of risk involved. You can only answer the degree of risk tolerance you can bear if you have suffered losses in real life.
The spiritual facet emerges here prominently because you must connect with your deeper self to answer these questions with truth and confidence.
How Does Spirituality Help Individuals Become Better Investors?
Irrespective of whether we follow an organized religion or not, wealth creation is a core financial goal for most people. Given the innate connection between spirituality and investing, it can help to draw and apply some of these spiritual life lessons to an individual’s investing behavior.
Let’s look at the key lessons from spirituality that can help anyone become better investors
1. Mental Toughness
The pandemic years brought a lot of stress and unhappiness for investors. Several people lost money, assets, and properties during this time. While the impact of the pandemic went beyond just traders and investors, you must be mentally tough to become better investors, and this is where spirituality plays a role.
Spirituality brings a sense of self-awareness that helps investors weather bad times. In addition, it helps to avert investors from making irrational decisions.
Investing decisions are intricately linked to the investor’s self-awareness. Again, this is a personality trait that is connected deeply with spirituality helps to become better investors.
Even if one does not lean towards active spirituality, the concept of self-awareness does. As a matter of fact, when investment decisions are on the table, some investors will look at them as external problems as opposed to some investors aligning themselves with solutions that come from within them.
This is a differentiating factor where one class of investors considers investing to be only about investments, and the remaining think of investing as a part of themselves.
When it is a question of outlook, investors need to dig deep to understand the lens through which they wish to look at their investing habits and nature. This means that the same investment question can be examined from multiple perspectives.
Spirituality helps to make that inner connection that brings the right outlook to the forefront. This is another reason spirituality is deeply connected with individuals who aim to become better investors.
4. Attitude Toward Investments
One must consider their attitude to investing to become better investors. For instance, if we go back to Rahul’s example, the attitude about investing in small and mid-cap funds was influenced by several external factors, primarily the prevailing conditions of the stock market. Therefore, the second aspect of investing for retirement was looking at investing in solving and reaching a critical financial life goal.
The attitude towards each investing problem and reaching a viable solution is deeply influenced by the self-awareness of the investors. The sense of self-awareness is related to spirituality.
5. Risk Tolerance
Risk appetite is a vital component of any investment decision. Of course, the ability to bear the risk differs from investor to investor. However, when investors are spiritually connected, their mental strength helps them manage these decisions much better.
Even if they suffer losses, they can reflect on their errors and deal with the panic and stress, which is a real-life experience for many investors.
To become better investors, one needs to keep in mind the three pillars of investing psychology – i.e., emotional, cognitive, and spiritual development. It can boost performance for those who want to learn how to become better investors.
What is the meaning of spiritual investment?
A spiritual investment is about caring about the footprints left behind bearing in mind that each financial decision leaves a legacy that can last in perpetuity.
How can you become a good investor?
Chart out an investment strategy that works for you and live by it. Then, harness the power of investing for the long term by following three basic rules – invest early, reinvest your earnings, and stay diversified.
What are the two core characteristics of a good investor?
The two core characteristics of a good investor are knowledge and an interest in the product or industry.