William J Bernstein is a celebrated financial theorist and neurologist with many articles and research published in the field of modern portfolio theory.
He is also a bestselling author of many books on investments and related fields, including ‘The birth of Plenty’ and ‘the Intelligent Asset Allocator’.
Bernstein, an advocate of modern portfolio theory, suggests that instead of searching for the next multi-bagger to be added in the existing portfolio, one should focus on proper asset allocation among different asset classes, such as equities and debt.
According to him, asset allocation plays the most vital role in long-term wealth creation rather than selecting individual stocks or bonds.
One of Bernstein’s famous quotes mentioned below sums up his ideas on money management.
The amounts of complexity involved and sophistication required for managing money or, more precisely, a portfolio of assets for the future is placed ahead of ‘surgery’ or ‘driving a plane’.
I believe one reason why money management is so complex is that there are so many different and unpredictable variables involved.
An event occurring in the remotest corner of the earth today can affect your portfolio’s value tomorrow.
However, the ease and comfort provided by new age applications and a boisterous stream of information available 24X7 at a click of a button give many investors the false impression that money management is a cakewalk.
Such a belief can lead anyone astray from the path of financial prudence.
Money management requires rigour, determination, domain knowledge and above all, emotional discipline consistently for an extended period to bear fruits.
Just like you don’t take chances with your health and seek an expert doctor’s advice, money is a crucial resource for a happy life that shouldn’t be left at the mercy of a casual approach or half-baked knowledge.
A qualified financial mentor or advisor is the only person who will support you on such an arduous and long journey of wealth creation so that you stay on course and reap the rich harvests of financial freedom.
Picture credit: Thanks, FIFA India (Foundation of Independent Financial Advisors) for sharing this amazing quote.
