Be financially content

It will help keep you calm during market turbulence

By Cassie Carstens


A blacksmith forges iron between 950 °C and 1250 °C. It reminds me of all the balls that individuals have to keep in the air on a daily basis alongside external events such as Covid-19, inflation shocks, wars and Eskom debacles. If iron is heated just slightly more, it reaches a melting point at 1370 °C.

Investors can be “forged” for a long time and endure it, but everyone has a financial melting point ─ which often leads to irrational decisions. Over the years, we have found that investors who are financially content have a much better framework for avoiding this melting point.

This is not a personal self-help column. Rather, we want to outline an action plan with which financial freedom and satisfaction can be cultivated in the investment environment.

The action plan.

1) Keep your cool

It is a good idea to keep Rudyard Kipling’s phrase handy in the midst of market shocks ─ “If you can keep your head when all about you are losing theirs”.

When our firstborn had a croup attack at five months old, and we had to follow the emergency room’s instructions, I could have had Kipling’s phrase tattooed on my arm and it wouldn’t have made a difference. Over time, you come to terms with how often common childhood illnesses (and market fluctuations) occur and you make peace with how little control you have over it.

The accompanying chart shows the return of the S&P 500 over the previous 42 years. In each of the 42 years, there was a period during the year when the market declined, with the average decline being around 14%. Despite this, the return was positive in 32 of the 42 years (and in most cases largely so).

You will be rewarded over time by investing in capital growth assets, but in many cases, you will feel as if you are standing in the ER at 3 am. By keeping your cool and making absolute peace with this, you are taking a big step forward towards financial contentedness.

2) Intergenerational prosperity

The saying goes that the first generation builds wealth, the second generation spends it, and the third generation blows it. Do you have an inheritance plan (this is something completely different from a will)?

Ninety One recently released research:

  • 70% of the investors on its platform are 60 years and older;
  • 53% of the wealth in the USA is held by the post-war generation, the so-called Baby Boomers (between 57 and 75 years old), and another 18% by the generation older than them; and
  • 71% of the Millennials (25 to 40 years) in South Africa are unemployed compared to 45% overseas.


Within the next ten to 20 years, one of the largest transfers of intergenerational wealth will take place. The generation that will receive it has completely different needs (good and bad), priorities, spending and saving patterns. It is the older generation’s duty to ensure that the next generation does not end up like the stereotypical third generation. Ask yourself:

  • Do your children (or spouse) have the necessary financial advice and assistance if they receive this wealth?
  • Should the money go directly to them or is a trust a better option?
  • How much of your knowledge about financial principles have you already transferred to them?
  • Should you start sharing your wealth within limits with your children instead of keeping everything back until you die?
  • Are your beneficiary nominations and investment structures consistent with your inheritance plan?


Knowing that you have an inheritance plan helps create financial satisfaction.

3) Process

I wish we could magically change one question ─ from “what investment returns do you offer” to “what is your investment process”?

A proper investment process is like building a house on rock and not on sand.

More importantly ─ is your advisor or fund manager going to change course with their investment strategy every time things get a little tough? The previous two years offer a wonderful example of this.

The Ark Innovation Fund has been very popular because of its investments in disruptive innovation stocks.

The chart shows how investors poured in while the value increased. When the bubble burst, however, there was nowhere to hide.

The orange line is the share price of the investment holding company Berkshire Hathaway managed by Warren Buffett. It is remarkable how the “turtle in the classroom” did not change its modus operandi while Ark’s value soared and after five years crossed lines again with some of the technology-driven stocks.

4) Financial plan

During one of the first reviews after the Covid-19 pandemic, I spoke to a retired client about the 40% drop in his stock portfolio at that stage. His question to me was: “Has my financial plan changed?”

It was that simple ─ the asset rebalancing was done within the investment model, but the overall financial plan didn’t change.

You have to make adjustments, such as delaying an increase in income, avoiding withdrawals and cutting expenses, but your ability to stay true to your overall financial plan creates financial contentedness.

It is becoming increasingly difficult to implement an investment plan in a world that has become obsessed with the accumulation of goods, social media statuses and instant gratification. Your action plan can be a big step forward in overcoming this.

Cassie Carstens is a certified financial planner of Woodland Wealth. Contact him at info@woodlandwealth.co.za.


Although all possible care has been taken in the preparation of this document, the factual correctness of the information contained herein cannot be guaranteed. This document does not constitute advice and anyone who intends to take any financial action based on this document is strongly advised to first consult with his/her personal financial advisor. Woodland Wealth is an authorized financial service provider with FSP no. 5966.

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