"All that glitters is not gold."

How do we ensure that we focus only on what matters to our personal financial plan, and don’t get worried and concerned by unnecessary distractions?

All that glitters is not gold. Early expressions of this idea are known from the 12^th-13^th century but the current saying derives from a 16^th century line by William Shakespeare; “All that glisters is not gold”.

In other words, what gets the attention is not always valuable or what matters.

This can be very true of financial planning. By nature, financial planning and wealth management is medium- to long-term and – in my experience – this mindset can often be undermined by short-term distractions that create concern and worry for clients.

For instance, the media at large typically tends to only focus on what has happened in the financial markets yesterday and today, and provide some headlines as to the reasons why.

Given the global stock market is worth ~$100 trillion (and that’s before we take into account non-equity asset classes), it begs the question: “How valuable is this information from the media?”

At best it’s noise, and at worst, it’s a distraction from what really matters.

Whilst there’s absolutely nothing wrong with staying abreast of what’s happening in the World markets, there are really only two things that have true value and relevance in pursuit of our financial goals.

Our personal financial plan and an understanding of market history.

This is because:

1. Our personal financial plan is the specific guidance that is based on our current situation and what we want to achieve, and

2. Market history provides the necessary context and perspective to what’s happening today so we can make rational investing decisions (if and when decisions are needed).

Watching or reading today’s financial news without our financial plan or market history in view can be compared to driving a car at 60mph whilst we can only see 5 metres in front of us. It’s very dangerous!

When we drive, we need a destination and an idea of the route we will take to get there. We also need context so we’re not unnecessarily delayed or distracted by everything we may encounter on our journey.

This is why our personal financial plans and understanding market history are what really matters to truly help us to not make rash, knee-jerk investment decisions.

The more we are able to focus on what matters and avoid the noise and distraction, the more that glisters will be gold!