Slow finance: what is smart spending and investing
Just as a plant needs time, patience and care to grow, so does our money. At the very least, this approach will be the best way for it to grow sustainably and not lose itself as quickly as it came . The Slow Finance philosophy , based on slow living, proposes this precisely: saving in a thoughtful way, without haste, prioritizing investments in the medium and long term. And regarding consumption, do it with full awareness of what, when and how we spend our money. We have already seen it with slow food (as opposed to fast food ), slow travel (traveling without haste) and, in recent years, slow fashion ( slow fashion ). Now the slow movement comes to finance and investing.
Slow Finance or how to be aware of our money
The coronavirus has meant a mandatory stoppage and, in many cases, it has been an opportunity to live more slowly, with the advantages that this entails. Now “we value more the luck we have to enjoy things like a roof, hot water and electricity, food, as well as friends and family who support us, situations that we take for granted and rarely really value”, indicates Guillem Roig, member of the Spanish Association of Financial Advisors and Planners (EFPA). Without stress or rush, as recommended by the slow movement we can enjoy and value the little things more; we can also stop and reflect on life, our priorities… and why not on our finances.
The slow movement aims to live without stress, take time to produce something of quality and enjoy the process, “enjoy the trip and not obsess about getting to the destination quickly.” With regard to savings, slow living translates into “being aware of our money,” says Roig. And it is that, certainly, it is very difficult to know what we spend it on when life goes so fast. For this reason, being able to live without haste, and especially in times of uncertainty, helps us prioritize our expenses. “Ultimately, it allows us to save more and spend more intelligently,” he says.
What are slow investments?
As for investment, this slow, unhurried lifestyle “favors thinking long term and going little by little,” says the expert. In other words, it prevents us from getting carried away by short term dynamics that can lead to impulsive decisions that, in the long run, are “almost always harmful”.
This form of investment, which encourages acting in a conscious way, is the recipe for investing success. For this reason, slow living is an ideal philosophy for our money to grow sustainably over time.
Advantages and disadvantages for the small investor
In general, it is a way of investing that is a great advantage: it allows us to make better decisions . “Speed, greed and emotions are not usually good for managing our money properly,” says Guillem Roig.
However, this type of finance and investment also has drawbacks:
❌ The main one, that “for some people it can be boring, that is the reality”, acknowledges the EFPA expert, who also clarifies that “with money, boring works and is profitable in the long term”.
❌ It is also important to note that it is not a foolproof recipe . That is why it is essential to have real and independent advice. This will help us grow our money with our feet on the ground and increase the chances that we will meet our vital goals.
Tips for successfully practicing Slow Finance
Renta4, a pioneer bank in this way of investing, details some guidelines that you can follow so as not to make mistakes with slow investments :
- ✅ You should only contract products and services that you understand.
- ✅ It is important to be patient and not be in a hurry to create a wealth, but do it little by little.
- ✅ You always have to consider investments in the medium or long term .
- ✅ You should let yourself be advised by experts .
- ✅ Stay true to a strategy and avoid making decisions based on panic and euphoria.
- ✅ You should let yourself be advised, but keeping in mind that the final decision is only yours, and you should feel comfortable with it.
Is now a good time to invest?
Pandemic, economic crisis… It all seems to be bad news and not a few wonder if it will be the right time to invest. The expert Guillem Roig removes us from doubts: “The best time to invest was yesterday, and the second best time is now.” In his opinion, it is always a good time to start investing , if you have enough knowledge and choose the right products.
He also points out that multiple studies have shown that “trying to predict the best time to start investing does not work,” so it is best to start as soon as possible. Of course, it is essential to understand well where we put the money and with a long term perspective , without haste .
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