Recently returned from a five-year voyage aboard the HMS Beagle, Charles Darwin first hit upon his groundbreaking ideas about natural selection in July 1838.
Initially condemned in many quarters (not to mention challenging his own Christian beliefs), Darwin’s theory of evolution would go on to revolutionise our understanding of the natural world, and our place within it.
More than 180 years later, Darwin’s theory, expounded in his seminal work On the Origin of Species, has many valuable lessons to share, not least about the adaptability and evolution of your long-term financial plans.
Keep reading for three surprising money lessons Charles Darwin’s theory of evolution can teach you today.
1. Change might be slow so playing the long game is key
In On the Origin of Species, Darwin wrote that “we see nothing of these slow changes in progress until the hand of time has marked the long lapse of ages”. Or to put it another way, evolution can take a while.
Your financial plans might not evolve over millennia, but it is important to remember that your investments should be long term, with end goals at least 5 to 10 years away.
This gives your fund time to benefit from the general upward trend of investment markets and the effects of compound growth, while also riding out short-term dips. Ignoring the noise of daily fluctuations, and wider geo-political changes, gives you the best chance of achieving your goals.
All of this isn’t to say that your plans can’t change – just that they don’t need to be amended if your goals remain the same. Playing the long game is key.
2. The best plan is the one that best adapts to its changing environment
Evolution is a slow process – it took fish around 300 million years to emerge from the sea onto land – but there might be two timescales at play. Adaptability is a crucial aspect of evolution and adaptations can happen much more quickly.
Take, for example, the Galapagos finch. Back in the 1800s, Darwin found two common varieties, with small or large beaks depending on the prevalent food source on the island where they mainly lived.
Generally speaking, the small-beaked variety was better suited to wet conditions and the food on offer in these environments, while the large-beaked finch flourished in dry environments.
Darwin was almost 100 years dead when in 1977 drought all but wiped out the small-beaked ground finch, and larger beaks became most common. The drought was followed in 1983 by a record wet spell. Within just a few years beak sizes shrank as the animals adapted to their new conditions.
So, while your long-term plans are like the aeons-long evolutionary journey, it’s ok to adapt if you need to. Huge life events like births, deaths, and marriages can act like drought to a Galapagos finch and mean that changes are needed.
A robust plan will also be flexible, moving and changing with you. Remember that even the theory of evolution is itself evolving, with new discoveries being made all the time.
3. Being part of a strong team can provide a kind of “cultural group selection”
As we have seen, natural selection (or survival of the fittest) is a key concept of Darwin’s evolutionary theory. It can make it feel as though every species, and even every member of that species, is pitted against the rest. And yet, in our everyday human lives, this is not the case.
Hopefully, we all have a support group around us in the form of family, friends, loved ones and colleagues. And these tight social groups make us stronger.
This might be one reason why human beings are kind to strangers, and why we have evolved to exist in large-scale cooperative societies. Recent research, based on Darwin’s original principles, suggests that natural selection could be acting at a large “cultural group” scale and that evolution favours these cooperative groups.
You might not be an expert when it comes to the ever-changing world of finance, but at Globe IFA we are.
That means we’re best placed to make your money work for you, and that collaborating with us could make you financially stronger. We can make sure that your finances are fit and healthy, and in the best possible shape to help you survive future financial shocks now, and during your life after work.
This mutually beneficial relationship makes us all stronger and the science behind this truth might well be Darwinian.
Get in touch
If you have any questions or need help with any aspect of your evolving finances, please get in touch. Email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
