Don’t Worry, Be Happy: Distinguishing “Worrying” From “Preparation”

“Worry is interest paid on trouble before it comes due” - William Ralph Inge

“Most things I worry about/Never happen anyway” – Tom Petty and the Heartbreakers, Crawling Back to You

I recently relayed some news to a client that a company whose stock she’s owned for years was preparing for a merger that would likely result in a pretty hefty amount of realized gains if she held onto the stock up through the merger date, but that the date of the merger hadn’t yet been finalized. The client thanked me for sharing the news and said, “Another thing to worry about…”

That comment stuck with me. I come from a long line of worriers. So far, over multiple generations, I don’t think it’s done us any good.

Worrying can feel like a productive activity, because you’re thinking through all the possible scenarios that could play out. That’s a falsehood. Worrying is ultimately the expression of anxiety, which author Seth Godin accurately defines in V is for Vulnerable: Life Outside the Comfort Zone as, “…experiencing failure in advance.”

Godin’s book is about how people can motivate themselves to do great work by viewing their work as art, but his message is equally appropriate for personal finance and investing. Consider the following questions and think about if you’ve asked them, either out loud or just to yourself:

• The Democrats/Republicans are going to win the upcoming election…isn’t that going to be bad for my portfolio?
• Aren’t interest rates about to go up/down/sideways?
• Didn’t I read that Social Security is going bankrupt?
• Isn’t the stock market due for another fall/crash?
• What if there’s a war here/there/everywhere?

These are all legitimate concerns. They are also all things over which we have little or no control. So why do we spend so much time fretting? That’s our anxiety driving the bus.

Interestingly, that anxiety is probably also leading us to latch onto the scariest answers. There’s an old phrase about saying something so often that it becomes true. Godin hits on a similar theme when he says that if you tell yourself enough vivid stories about the worst possible outcome, you’ll soon come to believe them. If you think Social Security isn’t going to be there when you retire, you’ll eat up every news story that suggests the same thing, even though the evidence clearly indicates the contrary.

Worrying is like self-medicating: it feels constructive, but it’s not. As Godin says, “Worry is not preparation, and anxiety doesn’t make you better.”

Instead of worrying, then, what if we spent more time preparing/planning?

For example, for the client situation with the pending stock merger, instead of worrying about a merger we can’t influence, we can use the time to talk about some planning options, like gifting the stock to family members in lower tax brackets to reduce the overall amount of tax paid or gifting a portion of the related stock to charity to receive a tax deduction.

More generally speaking, when Woodward Financial Advisors performs a Financial Independence Analysis for a client, we talk about how many alternative scenarios we can run, like showing the impact of reduced Social Security payments, higher than expected inflation or really bad investment returns right at retirement.

While we can’t necessarily control any of those things, we can theoretically change behavior now (e.g., save more, spend less, work longer, etc.) so that we’re partially shielded from some of the future impact, should a particular negative event materialize.