How Providend’s Philosophy of Sufficiency Reshaped the Way I Approach Investing
Defining your enough is one of the most important decisions you can make financially.
When I first encountered Providend’s Philosophy of Sufficiency, something inside me just clicked.
It wasn’t just another investment strategy or a formula for maximising returns. Instead, it felt like a profound shift in perspective, giving me the confirmation that reallocating my equity investments to index funds was the right thing to do.
You see, I had been investing in single stocks from 2009 to just a couple of months back, and I'm now passively investing my money through low-cost, globally diversified exchange-traded funds (ETFs) and unit trusts. I wrote about the evolution of my investing journey here if you are keen to learn more.
The Philosophy of Sufficiency is about understanding what’s truly important in your life (your non-negotiable life goals) and having enough returns to allow those goals to be actualised. It anchors on the truth that in life, you can’t have everything.
This philosophy challenged me to redefine my approach to investing.
For years, I focused on identifying high-quality companies, carefully analysing their financial statements, attending annual general meetings, and listening to earnings calls to find the best stocks (in my opinion) to put in a portfolio that would allow me to beat the market (or generate alpha in Wall Street-speak).
While it was exhilarating, it took up too much of my resources, especially my time.
However, when I shifted my investing framework around the concept of “enough,” I started to feel lighter.
Providend’s emphasis on aligning my investments with non-negotiable life goals—what is called “ikigai goals”— helped me to refocus. One of my ikigai goals is to spend more time with my family.
This shift led me to embrace a more sensible and sustainable investment strategy: investing in index funds. This evidence-based approach, while potentially offering market-average returns, provides a significantly higher probability of investing success compared to the rather time-consuming approach of stock picking.
It's about consistent growth over time, aligned with my life goals and a feeling of contentment, rather than spending hours and hours finding the next Amazon to own in my portfolio.
Another practical perk of anchoring on the Philosophy of Sufficiency and using index funds is that every time there’s a market correction, I don’t have to crack my head thinking of which stock to deploy my money into, given there’s an opportunity cost to choosing the wrong company.
With an index fund, I can just buy more of that single diversified investment and free up my time to think about my other important things in life, like where to bring my kids over the weekend.
Providend’s Philosophy of Sufficiency helped me to realise that true wealth isn't just about the numbers in my portfolio; it's about having the resources and freedom to live a fulfilling life, aligned with my values and aspirations.
It's also about having enough to pursue my passion, such as spending precious time with my loved ones. And for me, that’s a far more valuable return than any market-beating performance.
It’s a lesson I hope more investors will be open to, not just for better financial outcomes, but for a more fulfilling life. As the late Jack Bogle, founder of Vanguard and the man who pioneered index investing, once said:
“Enough is one dollar more than you need.”