How To Invest In 2018 – Part 2


Continuing from last week, we need to tackle the safeness-caring and drive sub-systems.

The drive sub-system resides in the nucleus accumbens. The sub-system operates on dopamine and alerts us to opportunities for pursuing goals and resources. The sub-system also keeps us focused on such opportunities. Achieving what we want becomes pleasurable because dopamine is released in our brain.

But just like the threat system, the overuse of the drive sub-system can be harmful as it can lead to addictions and compulsive behaviors. The drive sub-system can also lead to stress, perfectionism, burnout, and depression.

Take the case of those people who were duped billions of pesos by scammers offering “too-good-to-be-true” investment returns. Too much focus on returns, without considering the attendant risks, is harmful.

Marketers prey on these evolutionary sub-systems of threat and drive by triggering the “fears” that their products and services help to avoid, or by awakening albeit at times misguided “cravings” for their products and services.

Most of us tend to oscillate only between the threat and drive sub-systems, between living a life of aversion (under the threat sub-system) and one of craving (under the drive sub-system). Most of us also tend to merely oscillate between risk and return when it comes to investing. This oscillation can become exhausting because there is no room for peace and contentment with what we already have. The risk-return tradeoff for investing is for mere robots, which we are most definitely not.

Enter the safeness-caring sub-system that resides in the prefrontal cortex and operates on endorphins, oxytocin and other opiates. The safeness-caring sub-system operates when there is no threat to defend against and no goal to pursue. The sub-system opens us to opportunities of feeling safe, calm, peaceful and content. When we visualize having a long, healthy and prosperous life with family and friends, we feel safe, caring and cared for.

Again, just like with the other two sub-systems, an overuse of the safeness-caring sub-system can lead us to a nondriven, perhaps even lethargic life. This sub-system needs to be balanced with the drive and threat systems.

So, here is how you should invest in 2018 and beyond.

Start with visualizing what kind of life you want in the distant future. If you start with finding out which stock to buy, you are already focusing too much on the drive system.

To enjoy your visualized future, persuade yourself that it can be had in an affordable way by pursuing investment returns, derived from your quantified future compared to what you have to start with and what you can add to your investment fund. Temper your pursuit of return with the risks that you are willing to take. Finally, match the resulting tempered investment return with the options available to you.

Also remember that in investing directly in securities or a business, you should be all SET, which means you should have the size of funds, expertise and experience, and time to manage your investments “24/7.” If not, just invest through securities or businesses that already have seasoned investment managers on board.

While Jesse Livermore did say we should take away emotions in investing, I say we should use them to our advantage because emotions are part of our nature as humans. A balanced SDT (safeness-caring, drive and threat) system is thus the way to go regardless of the latest political, fiscal, monetary, global and domestic economic developments.


Efren Ll. Cruz is a Registered Financial Planner of RFP Philippines. He is best selling book author of Pwede Na! (A Complete Guide to Personal Finance) in 2004, and is the chairman and president of the Personal Finance Advisers Philippines Corporation.


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