Google “money management” and you’ll get back a quagmire of non-sequiturs, disjointed, inconsistent and incomplete information. There is no single comprehensive definition. There isn’t even any number of consistently similar definitions. Yet what do most Market Wizards disclose as one of the keys to their success: money management.
Frustrated by this sad state of affairs, my stock market class of over 100 investors onced decided to contribute their own personal definitions which I then carefully shifted through and organized. As a class, we whittled it down to what you see below. Perhaps then, we could respectfully submit this as the official definition of money management.
Money management is a written, personally-appropriate financial framework describing the types of investments and strategies that you feel will align with your personal goals, objectives and priorities.
- These guidelines describe the rules and tools you deem appropriate in managing your wealth.
- They acknowledge your risk tolerance and the risk management techniques you employ to protect your assets.
- Finally, they provide an ever-changing lifelong timeline and roadmap according to the methodologies and resources you use to ensure disciplined stewardship of your assets as you attempt to maximize the return on your investments.
Trade well; trade with discipline!
-- Gatis Roze
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