Invest Like Sun Tzu: Lessons to Help Shape Your Finances

What can Sun Tzu, a Chinese philosopher-general born in 496BC, teach you about active investing and trading?

 

Sun Tzu’s the Art of War is one of the most famous texts in the world, and justifiably so. Modern statesmen, generals and business leaders have pored over this hymn to strategic thinking for centuries.

But the text can also offer invaluable lessons for anyone wanting to grow their wealth. And in a world where many of us could live to 100 — if not longer — it is more important than ever to be as strategic as a general when it comes to your wealth.

At the moment, only a little over a quarter of Singaporeans surveyed feel they are financially ready to live 100 years . With Sun Tzu’s advice, that may change. Advice like…

1. Self-knowledge is Key
Sun Tzu says: “Know yourself and you will win all battles.”

What that means for you: You may have been investing for years, but people change over time — how often do you return to asking fundamental questions, so that you know your actions align with your desires and lifestyle? These fundamental questions include: what kind of investor am I? Do I prefer high-risk, high-return investments, or am I happier with a slow and steady fund? Do I want investments that are environmentally friendly?

Set aside time to answer these key questions, and you will have a much clearer idea of your investment future.

 

2. Plan, Plan, Plan
Sun Tzu says: “Ponder and deliberate before you make a move.”

What that means for you: When it comes to your investment strategy, don’t just plan for the expected — plan for the unexpected, too. Do that, and you can help protect against unforeseen circumstances like illness or accidents, which can quickly shrink your savings.

By thinking through what you want to achieve, possible risks and rough timelines, you will in many cases find your journey becomes smoother. It is often best to work with a Financial Consultant who can help achieve this, as they can use their expertise to match risk profiles, time horizons and retirement objectives.

3. Create a “Rainbow” of Investments Sun Tzu says: “There are not more than five primary colours, yet in combination they produce more hues than can ever been seen.”

What that means for you: There is value in creating a strong, diverse suite of investments across and within different asset classes. Diversify, and even if one area of your portfolio might not be strong for now, the others may help to prevent financial instability. This diversity could be across and within different asset classes, and include savings, investments, life, term and medical insurance.

Follow these guiding pieces of advice, and you may potentially forge a path to success for your 100-year-financial plan.

¹Ready for 100 Whitepaper, 2018, a study conducted by EIU commissioned by Prudential Singapore.