Life in waves: My journey to understanding suitability

This reflects my personal experience and opinions, not professional financial advice. Everyone’s situation is different, and you should consult with qualified professionals for your own financial decisions.

I’m 49 now, and I’ve been through a lot. The journey has included the thrill of buying a house, the joy of a wedding, the pain of divorce, and the uncertainty of being between jobs. Each of those moments felt like a shockwave, and through them all, I’ve learned that the most important lesson in finance isn’t about picking the right investment; it’s about understanding my own life.

This is what I’ve come to call suitability. It’s the profound realization that an investment, no matter how great on paper, must be appropriate for my own financial reality. It’s a lesson I learned not from a textbook, but from experience.

My grandfather’s story: A lesson that stuck with me

I still think about my late grandfather’s experience. Back in 2005, when he was 78, a bank manager sold him a retirement plan with a tax advantage. In my opinion, the manager didn’t give proper attention to his life situation. My grandfather had a heart condition and received a significant tax break because of it — a detail that made a long-term, illiquid plan completely unsuitable for him.

What I took from that was a deep distrust for the “one-size-fits-all” approach. I learned that a good financial plan should be a reflection of your life, not just the market.

Time horizon: More than just my age

I came to see that my own time horizon wasn’t a static number based on my age. It was a dynamic reflection of my circumstances. In my late 20s, with student loans and a wedding on the horizon, my time horizon was short. My goals were debt repayment and short-term savings. Later, in my 30s, after I had a house and a more stable income, my time horizon lengthened, and I could shift my focus more heavily to long-term investing.

I learned that a financial plan that ignores these different life phases is by its very nature unprepared for them.

The “dosage” principle: My own medicine and poison

For me, the difference between a sound investment and a mistake has always been the dosage. I learned that putting a large sum into an aggressive, long-term fund while I had high-interest debt was a mistake. It felt like a poison because I was losing money on one end while trying to make it on the other.

My medicine was to start small. I focused on paying off debt and building up short-term cash. Then, I began my long-term investing with a small, disciplined amount. I didn’t rush it. This allowed me to learn about market volatility and the fund I was invested in without the panic of having too much on the line. As my life became more stable, I was able to increase the dosage.

The infinite ebb and flow of life

There’s an old song in my country that says life comes in waves like the ocean. I’ve found this to be true in finance. I experienced the “ebb” of being between jobs and the “flow” of a new promotion. I was as prepared as anyone can be, and my preparations were my financial safeguards.

I had learned to build a resilient financial plan that included an emergency fund and sound debt management. These weren’t just abstract concepts; they were my personal life rafts, allowing me to weather the storms without having to sell my long-term investments at a loss.

My view on All-Weather and personal suitability

I’ve come to appreciate strategies like Ray Dalio’s All-Weather portfolio. I see the value in its design — to perform well in any market season. It is, in my opinion, a great way to generate value over a long period of time.

But I know, with absolute certainty, that even a strategy this well-conceived isn’t a silver bullet. The market can be all-weather, but my life, with its constant changes, requires a deeper, more personal form of suitability. It’s the most important lesson I’ve learned, and it’s what has allowed me to navigate my financial journey with a measure of peace.