OPINION: One of the greatest of human characteristics is curiosity.
It seems to me that the propensity to delve into what is happening (and why) is perhaps the most useful and valuable personality trait that we have.
With enough curiosity, we can get to the bottom of just about any issue and understand the things we need.
This is certainly so with finances. An attitude of curiosity means that you strive to understand how money works and what you should be doing.
That is a far better attitude than the more common one of telling yourself that you are no good with money and what does it matter, anyway.
Curiosity means asking questions and gets us to learn to listen. It also stops us giving up: we keep asking questions until we understand. If we are curious enough about something, we keep at it.
This is especially valuable when selecting investments. The selection of the right shares or bonds requires a thorough understanding.
That comes from asking the right questions which is driven by a desire to know. If you are curious enough about the shares or bonds that you might own, you will naturally take a deep dive into research.
For example, if you are thinking of buying a company’s shares and come at the purchase curious about what makes the company profitable, you will keep asking questions until you understand.
You may come to understand that you should not touch the company with a barge pole, but that understanding is better than buying in ignorance.
Curiosity extends beyond a desire to know about finances or particular companies: you should also be curious about yourself and your own behaviour.
This involves that relatively new and very interesting field of behavioural finance which studies why we are sometimes irrational when it comes to money.
Curiosity means that if we do something that failed, we ask ourselves why we did it.
For example, if you are curious, you might ask why you held on to a poorly performing share before it took a major dive.
Many people hold on to their poor performers telling themselves that they will sell when it come back to it purchase price.
This is irrational: the thing that lost you the money is most unlikely to get back your loss.
A rational person would recognise that they have bought a poor investment, recover whatever they can out and get it into something good.
Instead, we anchor ourselves to the dud investment, hoping against hope that we will get our money back from something we know to be an investment dog.
If you are curious enough, you will start to ask yourself why you held on and then make sure that you never do it again.
For my money, curiosity is the most under-appreciated and underrated attitude that we have – something to be developed and nurtured so that you have greater knowledge and stop repeating the same mistakes.
Martin Hawes is the Chair of the Summer KiwiSaver Investment Committee. He is an Authorised Financial Adviser and a disclosure statement is available on request and free of charge, or can be found at www.martinhawes.com.