You may have already heard of the acronym KISS: Keep it simple and straighforward – or keep is simple stupid. It follows the concept that you should not complicate something, when there is a simple way to achieve your goal.
It is similar to the concept of Ockham’s razor: when trying to understand something, getting unnecessary information out of the way is the fastest way to reach the truth or to the best explanation.
Albert Einstein also said something similar, putting his emphasis on maximum simplicity, without losing or forgetting any essential information.
Everything should be made as simple as possible, but not simpler.
Albert Einstein
Keeping something simple ensures that you are not overwelmed with unimportant details and can focus of what is really important to achieve your goal.
This can apply to any investment strategy for your future stock or real estate portfolio or a business plan for your new start-up as well.
Whatever I am up to, my motto is always: “Keep it simple and straightforward”.
But don’t confuse keeping it simple with being simple!
Keeping things as simple as possible allows me to recognise risks in many situations in the first place and then to avoid them.
For example, if I have a plan down to the last detail about which stocks to invest in and check every little detail of the company, it is quite possible that I will miss the big picture and don’t even notice that the company has missed important trends and is about to be overrun by its competitors.
Only when I manage to take the complexity out of something I can focus on what is really important, otherwise I could be blinded by details and I won’t get the overall picture.
Another benefit of keeping something simple is that that I am be able to achieve long-term goals:
My best advice #1: Always think long-term!
We humans – me in particular – are like that: we can deal with complexity to a certain extent, but in the end, and especially in the long run, this complexity means stress for us. Therefore, keeping it simple, I am able to deal with more topics in a better way.
Keep it simple also means break a complex task in many simple ones. This leads us to another interesting concept that James Clear has visualized in a very simple way in his book:
Atomic Habits – James Clear
In this bestseeling book Atomic Habits*, James Clears reveals exactly how simple changes can grow into life-altering outcomes. He uncovers a handful of simple life hacks:
- the forgotten art of Habit Stacking,
- the unexpected power of the Two Minute Rule
- the trick to entering the Goldilocks Zone
and delves into cutting-edge psychology and neuroscience to explain why they matter.
Keep it simple: A practical example
And now an example why the whole thing is so important, especially for long-term goals.
Which of the following is easier for you to pursue over a longer period of time and stay motivated? For me, the answer is very easy.
A – unstructured
- Exercise a few times a week;
- make sure you eat fruits, proteins and whole grains throughout the day and avoid sweets;
- drink enough water
B – concrete
Monday to Friday:
- Get up at 7:00 a.m.;
- Warm up at 7:10 a.m. and do Workout Plan A;
- Breakfast at 7:45 a.m. with 200g of low-fat skyr, ca. 10 blueberries and half a banana;
- Drink at least one glass (0.3L) per hours;
With the variant A, I would probably go crazy after one week, accomplishing nothing and not even knowing what the main goal was.
Whereas with the B option, I might eat a little more or a little less on some days, exercise a little more or a little less, but always have in mind that I should exercise, avoid sweets and eat certain foods.
As far as my diet is concerned, I actually try to stick to this variant and this kind of plan and I do quite well with it. I have had no problem sticking to these goals over a longer period of time and when I start seeing results after some weeks, I am happy I did keep it simple.
Keep it simple: How can you simplify your financial planning approach?
My financial planning approach is no different.
Instead of planning my asset structure down to the last detail for every life situation and opportunity, I only have three “money pots” that I have to serve:
- the necessary financial cushion
- a diversified investment portfolio
- some individual investments.
This allows me to know at any time exactly where I stand with my assets on my way to financial independence and where I should allocate my money next in order to develop my assets sustainably.
In addition, I can recognise opportunities for my assets more quickly, because I don’t have to leaf through a plan every time to know whether an investment makes sense for me and my assets or not.
Inside each pot of money then looks similar. I know exactly what kind of investments I am looking for roughly and also focus only on certain “products”.
For example, when it comes to the diversified portfolio, I look for low-cost ETF or manageged funds that are as broadly invested as possible. When it comes to the individual investments, I look for solid equity stocks.
Of course, for myself, I go more in-depth and have more criteria that need to be met. But this approach allows me to stay on the ball at all times and over a long period of time, taking advantage of opportunities at the right moment and (hopefully) avoiding risks in the future.
I hope that this tip will also help you. I would certainly take it to heart.
Keep it simple and be happy, atomic habits by james clear, keeping it simple helps you in your life
* What the star means:
I only promote products that I am convinced of and in many cases use myself. For links marked with a *, I receive a small commission if a contract or purchase is made through the linked provider. There are no additional costs for you and I can cover the costs for hosting the blog to provide you with useful information and tips. As an Amazon partner I earn on qualified sales.
Please read the disclaimer.