Wealth is a complicated subject and is not talked about often because of the complexity and emotionality attached to it. The deeper explorations of money matters remain untouched because of these complexities. Money generates a lot of emotions like fear, stress, anxiety, envy, hope and happiness. To put all the emotions in words becomes a Herculean task for the common people. Hence, they prefer not to get into the details of wealth and remain concerned only with the practical matters like jobs, salaries, insurance etc.
However, in order to make more sense of this complicated equation, there are plans-big plans! The money matters can be broken down into steps to get a more sensible understanding. The path begins with defining the purpose of an individual’s life, then setting priorities and finally make decisions around these priorities. If the defined path is followed, wealth can be easily broken down into reasonable ingredients, which are better comprehended by the common men.
A beautiful attempt at this has been done by Brian Portnoy in his book “The Geometry of Wealth: How to Shape a Life of Money and Meaning”. Brian converts the three paths in the discovery of wealth into three common shapes.
“The Geometry of Wealth is a story told in three parts, through three basic shapes: A circle, triangle, and square. These represent the journey from purpose to priorities to tactics. Each step has a primary action associated with it. The first is adaptation. The second is prioritisation. The third is simplification. The framework builds a bridge from mindset to action. The narrative of the book moves from the most important to the least, and from the most abstract to the most actionable. The principle that motors us along the entire way is what I call “adaptive simplicity,” a means of both rolling with the punches and cutting through the noise.
Funded contentment starts with figuring out the stories that define us. There is no general formula for discovering what each of us should or can attach meaning to. We can find purpose through family, career, community, faith, country, or any other number of personal passions or interests. How you identify or choose what defines you is the most personal of considerations. However, the process by which we navigate life’s inevitable ups and downs is shared. The circle illuminates the process of figuring it out.
It is a clever idea to represent life as a circle. The circle depicts how life is a process of defining and adapting and then doing the same again and again, to meet the changing needs. For instance, at times of adversity, the plans need to be changed and changes need to be adapted. This is linked to wealth in the way that how money and happiness are related for an individual. The relationship varies for different people and needs to be analysed. It is not necessary that the people with more money are happier.
It’s one thing to imagine a fulfilling life. It’s another to put a plan in place to achieve it. Crossing from mission to method, a triangle puts in motion three ranked priorities for navigating our money lives. Having a clear-cut hierarchy of goals quickly allows us to distinguish the more important tasks and evade the distractions.
Three factors drive good investment outcomes. The first is our own behaviour, unquestionably the most important of the three. After behaviour, it’s the content of one’s overall portfolio that allows us to manage risk and grow our capital.
The next step is to prioritise things in life. They form a triangle, with the most basic priorities at the bottom, going up. The definition of wealth varies for people with different priorities, and so do their investment decisions.
The square approaches tactical decision-making through the lens of expectations. We aim to set reasonable investment expectations for how to navigate the market’s ride, both intellectually and emotionally.
The square breaks investment decision-making into four irreducible elements. The first corner represents the growth we hope to achieve. The second corner is the emotional pain of achieving those gains, as driven by how jumpy prices are. Volatility can prompt bad decisions. Third, t captures how additional decisions improve or undermine what you already own. Finally, flexibility—what technicians refer to as liquidity—illuminates both the value and cost of being able to change your mind. The square reveals that this game is less complicated and more winnable than it might appear at first. Getting from complex to simple isn’t easy, though, which is why being methodical is the key to unlocking success.”
The square then represents the decision-making to fulfil the expectations and achieve the goals. It helps to simplify the process by breaking it down into smaller elements.
In this way, with the help of geometry and these three shapes, the journey for achieving wealth can be simplified and made achievable. The journey moves from purpose to priorities to tactics. So, to understand and create investment goals, the investors must go through the process of defining their purpose, priorities and tactics. Once these are figured out, wealth creation and wealth management will not remain as complicated as they sound.