It was while shaving one morning recently that Occam’s razor came to mind. William of Occam was a 14th century Franciscan Friar who studied logic and is credited as the first person to make known the “law of briefness”. In short he said that when faced with a problem, in the absence of evidence to the contrary, the simplest solution/explanation is usually the best solution/explanation”.
Sometimes I wonder about my subconscious but I guess the link was razors – I was using a cheap 2 blade disposable razor to get rid of my long-weekend stubble and was amazed at how sharp it was and how easily it removed the growth. This in comparison to the 4 blade razor that I had previously used and which was significantly more expensive. It struck me that despite all the hype and marketing which seems to suggest that the more blades your razor has the better it will be – the evidence (that I was experiencing) was completely to the contrary; fewer were definitely better and sharper. Or to put it another way, simple is best! Occam’s razor in real life!
I think the same thing applies to our financial lives. So often when it comes to things financial we can easily be misled by clever marketers into believing that we need complex structures such as trusts or multiple benefits and bonus pay outs (bells and whistles) on our life insurance, derivatives in our investments, multiple rewards and bonuses on our medical aids, education policies…I could go on. There may well be a place for some of these things but as a rule they are there to serve the marketers (companies’) purposes and not yours. They are designed to appear to be something that no person in their right mind should do without.
I remember a client meeting a few years back with an elderly gentleman who had no idea of how much money he had and whether or not he would be ok financially. When we investigated further it became clear that he had more than R100 million in assets – problem was that they were in about 5 trusts and 3 or 4 cc’s and companies – he had no idea of his real “financial worth” and was living a miserable and stress-filled life as a result. I can clearly hear him lamenting the decision not to keep things simple.
In my experience, simple is definitely better. I understand simple, I remember simple and simple usually costs less too!
Next time you look at yourself in the mirror think of old William of Occam and think of how you need to apply the KISS principle in life and especially when it comes to your money: Keep It Simple Stupid!