Rot

Rot is often obvious in retrospect, but is rarely given a sense of urgency given it takes place over a long period of time. It can apply to many things, but financial rot is a biggie.

A regular portfolio rebalance isn't a priority until the overconcentration risk suddenly appears ten years down the road. Dollar cost averaging is an obvious solution until it's not done, and someone's still sitting in cash three years later after they were 'just waiting for the election to be over' or 'waiting for the news to get better' to invest the money. Barely saving at 35 doesn't stoke much urgency in the moment, but can completely rot your retirement out. There are countless examples of investors not doing little things well over time which then suddenly compound into big problems.

From Seth Godin:

"We spend much of our worrying time on crises. Our media is filled with warnings, coverage and fear of cataclysms. The big boom, the sudden end, the crash.

In fact, rot is far more common.

Things decay unless we persistently work to support them. Organizations, reputations, systems, health, investments… even our teeth. For every hockey player who lost a tooth in a game, there are a million people who lost one over time.

Fear the rot, the explosions are merely a distraction."

The lesson? Take a step back to recognize and address any current financial rot within your control. This will be significantly more productive than consuming news media pontificating about a crisis that will probably never happen and is not as relevant to you as you may think it is.

The rot is what does you in. Stem it as early as possible, as often as possible and for as long as possible. You'll be thankful down the road.