Why being optimistic for the future helps you to build your wealth

September 8, 2022

In the field of journalism, it’s well-known that bad news sells papers. If you look at the headlines on any given day, you’re certain to find more negative stories than positive, from fears of an economic downturn to worries about crime and the standards of education.

Of course, while it’s not hard to understand why they do this – newspapers have to turn a profit at the end of the day – it can still give you a very skewed idea of the world. With so much doom and gloom in the media, it’s easy to become pessimistic and this can affect how you plan for the future.

That’s why we thought it would be useful to explore why keeping your chin up can help you to build your wealth effectively.

Societies across the world have made incredible progress in recent decades

Thanks to the 24-hour news cycle, the average person is all too aware of what’s wrong in the world, but too little attention is paid to the huge leaps of progress that society has made.

One of the problems with the way news is often presented is that bad events tend to happen quickly, such as natural disasters or shocking crimes. But good events typically unfold more slowly, and we only notice their effects after some time has passed.

A great example is the decline of global poverty in the past few decades, as new technology and rising wealth levels lift people’s living standards. While the improvements are hard to notice in day-to-day life, over time you can see a huge improvement.

According to academic data, back in 1820 more than three-quarters of people in the world lived in extreme poverty. Today, the World Bank estimates that this number has fallen to only 8.7%.

The same trend of improvement can be seen in areas such as global literacy, child mortality rates, and the number of people living in democracies. When you look at the bigger picture, it becomes clear that the future holds far better prospects than you might think.

Our belief in a better future shapes our investing strategy

While it’s easy to look at the news and get disheartened, here at Ascenta we prefer to take a more optimistic view. Throughout history, people have overcome challenges and improved society, and we believe that this progress will continue into the future.

Of course, unlike Dr Pangloss from Voltaire’s Candide, we aren’t naïve enough to think that all is right with the world. We are well aware that, from time to time, there will be big events that slow or even halt the march of progress.

But when you look at the bigger picture, it becomes obvious that even though there have been challenges in the past, humans have always found ways to overcome them. It isn’t naivete that makes us believe that the march of progress will continue, but rather realism.

This same worldview, a firm belief in the future, helps to shape our approach to investing your wealth.

It’s important to take a long-term view when growing your wealth

As we discussed in a previous article, the Russian invasion of Ukraine has created massive shockwaves in recent months. Due to this, the Straits Times predicts that Europe could slump into a recession in Q4 of 2022, which would have major consequences for the global economy.

During downturns, it can be easy to look at a fall in the value of your portfolio and panic. In times like this, you might even be tempted to sell them prematurely to feel a sense of control over the situation. To avoid mistakes like this, it’s useful to take a step back and look at the bigger picture.

Because we have faith in the future, we know that it’s often wiser to take a long-term view of your finances, rather than worry about every short-term disruption. As you can see from the graphic below, even if markets suffer temporary downturns, over several decades they usually enjoy strong growth.

Our confidence in a brighter tomorrow is what enables us to invest effectively, so our clients can reach their goals.

Economic downturns are an unavoidable part of the market cycle but having faith in the future can help you to ride them out. In fact, as we discussed in a previous article, they can often be a useful time to grow your portfolio, as you can buy heavily-discounted assets that should rise again in value.

Working with a planner can give you greater confidence when investing

Of course, it’s one thing to be a confident investor in theory and entirely another in practice – when times are hard, even the bravest people can have doubts. That’s why it can often be helpful to seek professional advice.

When you work with a financial planner, we can work with you to ensure that you’re building your wealth effectively and are on track to reach your long-term goals. This can give you a greater sense of confidence that you’ll be able to weather any storms you might encounter.

We can also act as a sounding board when you make investing decisions, which can give you invaluable peace of mind that you’re making the right decisions with your money.

Get in touch

If you want to gain a greater sense of confidence when building your wealth, we can help. Either contact your financial planner directly, email us at hello@ascentawealth.com or fill in our online contact form to organise a meeting and we’ll get in touch.