Dualistic Thinking

Dualistic thinking assumes a universe where there are only two opposing, mutually incompatible options or realities. This type of thinking is either/or, good/bad, negative/positive, and has a significant impact on our beliefs and behaviours.

Our development is stymied by dualistic thinking. The sooner we can break free from this either/or mindset, the sooner we can nurture greater success in the workplace and in our personal lives.

This either/or mentality contributes to our fears and concerns by presuming the false restriction that no other choices exist. We might feel confined, perceiving little freedom when we think in this way.

We may feel trapped or powerless in a circumstance when our options, choices, and determination appear to be limited. We tend to react emotionally in such cases, sometimes not even aware of the reasons why. 

Dualistic thinking hinders our personal and professional progress because we rarely allow for a range of options. We rate the situations and people around us on a binary scale. We reduce our capacity to see alternative possibilities by limiting ourselves to only two options.

Our psychological bias is a significant hazard of dualistic thinking. The “snake bite” effect, for example, occurs when an investor has a bad experience with an investment that causes them to be more cautious in future investment decisions, lowering their return potential.

The fear of regret and feeling like we have made a decision that is inherently ‘wrong’ leads to this bias. One way to counter this effect is to adopt a strategy that closely adheres to predetermined investing criteria and eliminates most of the decision-making process on what to purchase, when to purchase, and how much to purchase.

Using rules-based trading techniques decreases the likelihood of an investor making a discretionary decision based on previous investment success.

We create unrealistic expectations when we consider simply “good” and “bad”. Whatever decision you make will have implications, some of which will be unexpected.

Those implications may appear to be a choice between what you leave behind against what you get, or there may be aspects of both that you appreciate. It’s crucial to recognise that it’s often impractical to expect our actions to only have two possible outcomes; we should always look for a third outcome to help balance our expectations.

Once we have realised this, we can concentrate on what appears to be the best course of action for our personal circumstances.

Don’t be a lemming

One long-held belief is that lemmings purposefully run off cliffs in their millions. This myth has become a metaphor for the behaviour of crowds of individuals who follow each other blindly, regardless of the consequences. Herd instincts are prevalent in all parts of life, including the financial industry when investors follow what they feel other investors are doing rather than conducting their own research.

A herd instinct is a type of behaviour in which people react to and follow the activities of others. This is comparable to how animal groups react to danger – whether real or imagined.

Following the crowd or herding can lead trends to amplify well beyond fundamentals. Prices can skyrocket when investors flood into ventures for fear of losing out or because they have heard something positive but haven’t done their own due research.

This unreasonable optimism can lead to asset bubbles that eventually burst.

In the opposite direction, sell-offs can lead to market crashes when people rush to sell simply because others are doing so, a phenomenon known as panic selling.

If most people are heading in one direction, an individual may feel as if they are making a mistake by walking in the opposite direction. They may also be afraid of being singled out for refusing to join the bandwagon. Although herding is instinctive, there are strategies to avoid following the mob, especially if you believe you will be making a mistake. It necessitates self-discipline as well as a few considerations:

  • Doing your own research is essential; study the facts and data and draw your own conclusions. Once you’ve completed your due diligence, then you can look at other people’s interpretations.
  • Inquire about how and why individuals are doing things. Are they making decisions based on the movement of the herd? If you believe it is the wrong decision for you, don’t be afraid to go against the grain.
  • If you’re distracted or emotionally charged, whether from stress or external factors, postpone making decisions.

Making investing decisions based on logical, objective criteria and not allowing emotions to take over is a solid strategy to avoid herd instinct. Another option is to use a contrarian approach, in which you purchase when others are panicking, taking advantage of bargains, and selling when excitement leads to overvaluation. As Jonathan Sacks once said, “The wisest rule in investment is: when others are selling, buy. When others are buying, sell.”

At the end of the day, it’s human nature to want to fit in, so resisting the impulse to stray from your plan might be challenging. This is where financial planners step in, serving as a sounding board for your decision-making process.

I’m not sure I want to know

There’s a story that was told many years ago (it may or may not be true…) about a Microsoft call-centre agent and their call with a deeply irate customer. Having recently purchased a computer that came pre-installed with Windows, the customer called to find out why his computer would not respond.

It goes a little like this:

Call-center Agent (CCA): Thank you for verifying your purchase; how can we help you today?

Customer (C): My computer isn’t responding, and I’ve tried everything!

CCA: Thank you for that feedback. What do you see on your screen?

C: Nothing!! Absolutely nothing!

CCA: Please press control, alt and delete together. Has that helped?

C: No – nothing has happened. I’ve tried all of this already!!

CCA: Is there an error message on your screen?

C: No – the screen is just black.

CCA: Is your screen on? Do you see the power light on in the bottom corner?

C: No – there is no power light on. (becoming more amiable) I don’t think the screen is on.

CCA: Is it plugged into the back of your computer correctly?

C: Hold on, I’ll follow the cable and check. (a few seconds pass) I can’t see behind the computer; it’s too dark.

CCA: Are you able to turn the lights on to check?

C: No, I can’t; we’re currently having load-shedding.

Sometimes, our biggest problems are our most basic problems. And, we can’t always see them ourselves until someone else reminds us. When it comes to financial planning and managing our money, it’s easy to become side-tracked by big ideas, fancy strategies, forecasting and spreadsheets, and overlook the basic starting blocks of budgeting. We miss what’s happening right in front of us.

Budgeting helps us stay connected to what’s happening with our money right now. So – why don’t we do it religiously?

Carl Richards, a regular contributor to the New York Times, shares some reasons for why we allow this to happen.

1- It’s not fun.

True. But remember, as Stephen Covey says, “If the ladder is not leaning against the right wall, every step we take just gets us to the wrong place faster.” Budgeting is how we make sure our spending ladder is leaning against the right wall.

2- I already know where my money is going.

No, you don’t. Sorry. Unless you track your spending, you don’t have a clue where your money goes. Everyone I’ve ever seen go through the process of tracking spending for 30 days usually ends up saying some version of, “I had no idea I was spending that much on X.”

3- I’m not sure I want to know.

I think this is the biggest mental hurdle. The reality is that as we become aware of what and how we’re spending, we’ll find some things that surprise and bother us. Then we have to decide: Do we want to change?

Carl goes on to suggest four ways to get back to the basics of budgeting:

1- Try tracking your spending for 30 days.

2- Don’t stress about what app to use.

3- Just carry around a pen and a little notebook, and each time you make a purchase, write down what you spent and how it made you feel.

4- At the end of the month, go back through your notebook and just notice. Become aware. That’s it.

The glamorous side of managing our money is making purchases that make us feel better – not in tracking our spending. But, the feel-good side of managing our money is in regaining and maintaining control of what we can do with our money, which starts with budgeting.

As Carl said, it’s not about making significant changes. At first, it’s just about becoming more aware and noticing what’s going on, noticing things that we may have missed or overlooked. 

The result is that we will be more mindful and have more control over our money; and that’s worth knowing.

Are you money-mental?

The simple answer is: Yes, we all are!

In a recent blog, we looked at five financial trip-wires and glanced over the term ‘mental accounting.’ Introduced in 1999, it’s a concept that refers to the different values we place on money. These values are often based on subjective criteria; sometimes, this subjectivity benefits us, and sometimes it doesn’t!

Mental accounting enables us to create emotional connections with our financial plan. When we consider investment strategies or risk cover, an emotional connection to the outcome, or the goal, is established and we are more likely to continue contributing money to that account.

The perceived importance of the outcome causes us to view the money involved differently. However, money is the same, no matter where we put it or how we spend it. There is a technical term for this universality of money; it’s called fungibility. Fungibility essentially speaks to the equal value of assets.

We learn about this very early in life – just think about kids in the sandpit who are learning to share. If one has the spade and bucket, and the other has the castle mould, they will very quickly figure out that swapping the mould for only the bucket, or only the spade, is not a fair value exchange. A fair trade would be both the bucket and the spade for the mould. 

As we grow up and start to trade with money, we conform to the commercial conventions of our society. We exchange money for products or services, and if we pay one price for an item in one place, we expect it to be similarly priced everywhere else. If it’s more expensive, we would expect to receive more value for that item.

This is where it gets more complicated, and we learn that value is highly subjective. Something that I consider valuable may not be something that you consider valuable. Mental accounting comes into play, and we assign a different value to inherently fungible items.

In an episode of the hit series Friends, Monica discovers that Chandler (her fiance) has a large amount of money invested that could pay for her dream wedding. Chandler initially refuses to spend all that money on one event because he had other plans for the money, long-term plans that included a family and a home. After sharing these thoughts with Monica, she understands his perspective, and they make a new plan together.

According to Investopedia, mental accounting often leads people to make irrational investment decisions and behave in financially counterproductive or detrimental ways, such as funding a low-interest savings account while carrying large credit card balances.

To avoid the mental accounting bias, individuals should treat money as perfectly fungible when they allocate among different accounts, be it a budget account (everyday living expenses), a discretionary spending account, or a wealth account (savings and investments).

Mental accounting also affects our approach to long-term investing and our risk cover. When we are young, it’s harder to invest for retirement – but as we get older, this becomes a higher priority. When we are healthy and strong, it’s harder to pay for life cover or income insurance because we can’t emotionally connect to the possibility that we will need those products.

There are many other areas where mental accounting skews our perspective, like when we receive a windfall (an inheritance, a tax refund or an unexpected gift) or finish paying off a large debt. The sudden availability of money that ‘we didn’t have to work’ for seems to have a different value than the money we receive through our salary, wages or investment payouts.

It’s not easy to simply say – it’s just money. When we are emotionally engaged in our finances, we need to have the space to talk about our options (like Chandler and Monica and the kids in the sandpit) and have a third party (your financial planner) to help us find a healthy balance.

A rational approach doesn’t mean we don’t enjoy our wealth; it means we can be more intentional with our wealth. If you’re feeling a little money-mental, maybe it’s time we had a chat.

Hold the line

“It’s not in the way that you hold me
It’s not in the way you say you care
It’s not in the way you’ve been treating my friends
It’s not in the way that you stayed till the end
It’s not in the way you look or the things that you say that you’ll do

Hold the line
Love isn’t always on time.”

If you have the tune of Toto’s yacht-rock hit from 1978, Hold the Line, stuck in your head, then you’re welcome! It’s an iconic tune that reminds us that showing love is not in one act or moment – it’s in everything we do.

It also reminds us that we can’t control the timing of events in our life – and this is why financial planning is so important.

From earning to protecting to investing to enduring, most of us want to know that we’re leaving more than just a fleeting memory behind. Most of us want to know that we’ve found meaning and lived a life of purpose, and are leaving our loved ones with means and opportunity.

Creating this opportunity for them is not easy, which is why we need to hold the line. In most financial plans, there are different ways to provide for your family, one of which includes life cover. Even if we have assets and investments that can provide an income after we are gone, expenses and debt need to be paid back first (remember, we can’t control the timing of life events…). 

Taxes and estate costs also eat into these calculations, which is why life cover is beneficial to boost the financial reserves to take care of the responsibilities for which you currently provide.

Holding the line (holding onto your life cover) benefits the integrity of your entire financial plan, but it’s also harder (and sometimes impossible) to replace this cover when you’re older. New risk calculations, amended products, and penalties will have a more significant impact on your net worth should you cancel your life cover early, hoping to start up later in life ‘when things get easier’.

There are a few ways to alleviate financial strain without forsaking this vital product in your portfolio. These have been shared many times before, but it’s always a good reminder to revisit them:

1. Reduce your monthly expenses

Cut back on items that aren’t essential, such as streaming subscriptions and data contracts. Critically evaluate your budget and examine what is needed and what is simply a nice-to-have. Remember, this is not forever; it’s about prioritizing your financial security.

2. Re-negotiate your debts

Try approaching creditors or your bank to negotiate the terms of any repayments. They may be willing to accept smaller sums over a longer period or help you consolidate loan accounts.

3. Negotiate your premium payment pattern

Request to change to an escalating-premium pattern for your life cover, which means your initial premiums will be lower and increase over time. (this could be product provider dependent)

Holding the line includes ‘the way that you stayed till the end’ – and when it comes to life cover, this cannot be more poignant. If you feel like you need some options to release financial tension or want to initiate life cover again, let’s have a chat and see how we can update your financial life plan.

Five financial tripwires

If you’ve ever seen the mayhem from the middle of the trading floor of the New York Stock Exchange (NYSE), you can be forgiven for thinking it’s a warzone! Whilst most stock exchanges around the world now trade electronically, having cleared out their trading floors, NYSE still hosts the traditional tussle of the floor traders’ open outcries.

But this is not the only place where money mayhem can cause a right kerfuffle. Every day, in all our lives, we face financial tripwires that are linked to our choices. Behavioural finance helps us identify and understand these hidden traps. Financial decisions around things like investments, payments, risk, and personal debt, are greatly influenced by our emotions, biases, and cognitive limitations.

There are five ways that our behaviours can hold back the growth of our wealth; call them blindspots or tripwires, they’re often hard to see, and we need to work on them.

Mental accounting

Nobel Prize-winning economist Richard Thaler introduced this idea in 1999. This concept refers to the different values we ascribe to money, based on subjective criteria, that often has detrimental results.

Herd behaviour

This tripwire is easier to understand, but it’s often hard to avoid due to peer pressure. Herd behaviour occurs when we choose to follow the crowd rather than make decisions based on our own analysis. When our friends, family or colleagues are making specific spending and investment choices, it’s not always easy to make a different decision.

Emotional gap

The emotional gap occurs when we allow extreme emotions or emotional strains (such as anxiety, anger, fear, or excitement) to guide our decision-making process. Often our emotions are a prominent reason why we do not make rational choices.


When we create a benchmark in our financial planning that is based on an arbitrary figure or traditional expectations (because it’s what our parents did) and make decisions around that benchmark, we’re anchoring. This is not necessarily negative, but if the benchmark is not realistic for our personal situation or holds us back from reaching our potential – it can be a tripwire for our financial future.


Self-attribution refers to a tendency to make choices based on overconfidence in our knowledge or skill. Self-attribution usually stems from an intrinsic skill in a particular area. If we are naturally talented or highly skilled in certain areas of life, we can run the risk of thinking our ability to achieve in those areas will flow into other areas. This is seldom the case, which is why we thrive in a community and not in isolation.

Having a financial adviser is a sure way to identify these tripwires in your financial plan and help you navigate them safely to secure a healthier, happier financial future.

The premium time to review your premiums

When it comes to financial planning, risk planning, estate planning and investing, many of us like to “set and forget”. Our lives are full of things to remember, for work, family and the communities in which we’re involved – often, the last thing we want to review is our financial portfolio.

As a result, it’s easy to forget why we have some of these financial products in the first place. The complexity of financial planning and investing (and the very reason why having a financial adviser helps) means that keeping tabs on changes and updates is nearly impossible for those who don’t work in the industry.

When it comes to short-term insurance, the different product providers are highly competitive and frequently update their rewards or affiliate partners and benefits. This means that comparing one premium with another is not as simple as comparing apples with apples. It also means that if you haven’t checked in on your short-term insurance recently, you could be overpaying, underpaying (and receiving less cover than you need) or simply be paying for a product that is no longer suitable for you.

Whichever situation you find yourself in of these three, it means that your financial portfolio is no longer optimised in your interest. It’s like going to a tailor in your thirties and having your clothes cut and fitted to your measurements, and then thinking those clothes will fit you perfectly for the next thirty years.

We all know that “a penny saved is a penny earned”, and this applies perfectly to the situation of paying insurance premiums that are either too high or not suited to your needs any more. Either – you will be able to save on premiums and invest more now or allocate those saved pennies elsewhere, or – you will be miss-insured and have to pay out more pennies in the event of a claim.

A sure way to reduce the strain on your financial plan is to check in on your short-term insurance at least once a year or whenever there has been a significant global event (like a pandemic or stock-market crash). At these times, changes are made to policies that could affect both the cost and the outcome of your cover. Reviewing them will either free up unnecessary expenses or lock in the benefits that you genuinely need.

Shopping around for better quotes, keeping your credit score in the positive and updating a list of your household items and assets are all good ways to keeping yourself in a stronger financial position. You can easily do this all yourself, but as mentioned above, the complexity of financial planning and related products means that having a financial adviser who can give you independent advice could save you in the long run.

Our oft-told money stories

Money isn’t real. It’s just an agreed-upon system of exchange.

Have you ever heard that? 

This is the realisation that many reach when feeling frustrated with tax systems, witnessing social injustice or experiencing the unfairness of life. While money and currency systems may not be real, they represent value and help us form and communicate meaning.

Money is interwoven with our stories of life and meaning.

“We tell ourselves a story about how we got that money, what it says about us, what we’re going to do with it and how other people judge us.” – Seth Godin

These stories are valuable and help us attach meaning, but they can also keep us stuck in an unhealthy relationship with our money. They reveal deeper beliefs that we have about money but don’t always say out loud. They are foundational to our choices and the way we perceive ourselves and others.

Some of these beliefs include thoughts like “I will be happier if I have more money”, “It’s not polite to talk about money with others”, and “Money corrupts people”.

A team of researchers from Kansas State University interviewed hundreds of people to find out what kinds of stories are common to most of us and compiled a list of four stories (they called them scripts) that help us identify our money mindset. According to a blog on careerattraction.com, they go a little like this:

  1. Avoidance

Individuals with an avoidance mindset assume a “head in the sand” approach to managing money — all things being equal, they’d rather not deal with it.

For the avoider, money stirs up feelings of fear, anxiety and disgust. They often don’t know what’s in their accounts and may not open their credit card statements when they come in the mail.

People with an avoidance mindset may think and say things like:

  • “I don’t deserve a lot of money when others have less than me.”
  • “If I’m rich, I’ll never know what people really want from me.”
  • “There is virtue in living with less money.”
  • “As long as I keep working hard, I won’t ever have to worry about money”


  1. Worship

The worship mindset is most commonly associated with the belief that “things would be better if one had more money.”

Has that thought ever crossed your mind? If so, you’re not alone. According to the research, this is the single most common belief. People with a worship mindset tend to attribute current unhappiness or dissatisfaction with a lack of money and, accordingly, believe that a higher salary or financial windfall would solve their current problems.

People with a worship mindset may think and say things like:

  • “You can never have enough money.”
  • “Money is power.”
  • “Things would get better if I had more money.”


  1. Status

Those with a status mindset tend to believe self-worth is linked with net worth. In the context of our core needs, people with this mindset equate money with significance — they use it as a proxy for importance in society. Often, the status mindset manifests as a competitive stance to acquire goods and material possessions, often referred to as a “keeping up with the Joneses.”

People with a status mindset say and think things like:

  • “Look at that expensive car… he must be successful.”
  • “If someone asked, I would probably tell them that I earn more than I actually do.”
  • “Poor people are lazy.”


  1. Vigilance

Those with a vigilant mindset pay very close attention to how much money is coming in and how much money is going out each month. They likely wear labels such as “cheap,” “tight”, and “frugal” with pride.

Those with a vigilant mindset commonly live well below their means – struggling, at times, to get comfortable with spending money on themselves even when they can afford to. Lastly, the money-vigilant are often secretive about their personal finances and may distrust financial institutions.

People with a vigilant mindset say and think things like:

  • “It’s not polite to talk about money.”
  • “Money should be saved, not spent.”
  • “It is extravagant to spend money on myself.”

When we can identify the stories that we tell ourselves, we can choose to tell ourselves different stories that are more accommodating, generous, inclusive and kind – first to ourselves and then to those we care for and are in our extended communities.

Let’s start telling and sharing stories that are unifying, accepting and encouraging.

Protecting your income for a better outcome

A few short decades ago, we lived in a world that seemed to have far more security and certainty. The rate of change was slower, and many assumed that if you stuck to the system, the system would look after you.

Social security, income security and good health were taken for granted in developed countries. The chance of losing one or all of the above didn’t feature too highly in financial plans. As you’re reading this, you are most likely already acutely aware that this is no longer the world in which we live.

From attacks on political structures that we assumed were unassailable to economic systems bending to the will and manipulation of the mega-wealthy or well-organised-online-communities – it’s harder and harder to protect our financial and life plans.

Planning for protection if you lose your income has simply become imperative.

There are financial products that can help with this, and there are financial planning strategies that can help with this.

When it comes to products, income protection is a popular option. These financial products are primarily designed to pay you a benefit if you cannot work for a while because of illness or injury. As needs evolve, the products evolve too, and some can be set up to provide an income due to retrenchment (not voluntary resignation).

When it comes to financial planning strategies, one can leverage or sell assets to cover a period of non-income or set up emergency funds that give you access to up to six months of income should you need it.

Unfortunately, many people take a head-in-sand approach when it comes to income protection, believing that they’ll never be inflicted with a disability, or assuming they can find a quick resolution if they are.

However, this doesn’t necessarily equate to positive thinking but rather naiveté. A more responsible approach would be to hope that disaster won’t strike while still having a back-up plan for when life has other ideas; because life will have other ideas.

If you’re going through an income crisis presently, then it’s hard to plan for the eventuality of another. You will now need professional financial advice more than ever to swim through the rough waters to solid ground. Only once you have regained an income, and are in an income-secure space, can you begin to protect your income for a better outcome.

If you are currently income-secure, make sure you have a strategy in place to build up resilience and protection for one of your greatest assets – your income!

Offshore shouldn’t be off-putting

“… your money deserves to go places,” Ninety One (dual-listed on both the South African and London Stock Exchanges).

Many people who choose to stay in a country feel a sense of pride and patriotism for their local residence. Whether it’s a native birth-right or an adopted sense of nationalism, buying, supporting and investing local is an important priority. 

So much so that the thought of moving money offshore can be off-putting. 

But when it comes to sound investment strategy, an offshore investment will give you access to opportunities across different countries, industries, companies and currencies, exposing your portfolio to more possibilities while diversifying your risk. As Ninety One says on their website: you enjoy life in the country you love, whilst your money discovers a world of investment opportunity.

Those opportunities are dynamic and ever-changing. As markets rise and fall, currency depreciation becomes either a strategic liability to any investment portfolios that are heavily weighted in cash, or creates opportunities for portfolios exposed to the export market.

Currency depreciation is a fall in the value of a currency in a floating exchange rate system. Economic fundamentals, interest rate differentials, political instability, or risk aversion can cause currency depreciation. Orderly currency depreciation can increase a country’s export activity as its products and services become cheaper to buy. (Investopedia.com)

This phenomenon is not unique to any one country and can hit any economy at any time. This is why investing offshore may enhance your returns and reduce risk by diversifying your exposure to a single currency or country.

Whilst it can help to form a prudent part of your portfolio alongside local investments, remember that the level of exposure must be linked to your personal financial plan.

It’s not about saying that one economy is better than another; it’s about recognising that by investing in local property, a local business or the local stock market alone, you are highly vulnerable to local conditions.

Offshore investing can reduce the risk of capital loss by spreading your investments across markets and currencies. It will also minimise the impact of currency depreciation or political and market events on your portfolio. Local fiscal and monetary policies may deteriorate along with the likes of state-owned enterprises and other government-led initiatives.

That being said – there are three things to consider when evaluating the benefits of offshore investing: inflation, interest rates and costs.

For all three, we should have a conversation about your personal setup to see how they could affect your decision to explore offshore.

Typically, you can invest directly, or you can look at an asset swap. According to Investopedia, an asset swap is used to transform cash flow characteristics to hedge risks from one financial instrument with undesirable cash flow characteristics into another with favourable cash flow.

Before you make any decisions, make sure we have checked in on your decision and that it aligns with your personal financial plan.