On Our Minds: Finding My Ikigai and Investing with Purpose

Remember Hygge? The Danish concept of "coziness in the home" was all the rage last winter when we were looking to slip into some fleece and snuggle by the fire. Well, don't get too comfy; there's a new life philosophy in town.

It's called ikigai (ee-kee-guy), and it's a Japanese concept that's less about ease and more about "living your life's purpose." While it may sound like a big idea, make it simpler by thinking of ikigai as a road map for identifying what gets you up in the morning. Focusing on the convergence of four core elements — your passion, mission, vocation and profession — Ikigai can be a useful guide whether you're making career, lifestyle or even investing decisions.

I wish I had come across the concept when I first started investing. For a beginner, investing can sometimes feel — as one friend of mine put it — like learning to water-ski with your mouth open. There's a lot to take in and it can feel overwhelming at times. That's certainly how I felt.

But there's nothing like having money at stake to focus one's attention. Early in my investing, I read mountains of articles, enrolled in investing courses and seminars, and closely followed the business media. At first it was exciting to learn so much. Eventually, though, attempting to understand many different, and often contradictory, investing strategies became confusing and exhausting. I was suffering from a classic case of information overload. If only I had applied ikigai. My investment decisions might just have been much simpler and better aligned with my values and interests.

Here's how I see ikigai working for beginner and advanced investors alike.

Identify what you love

Or rather, consider what interests you (love implies an all-encompassing passion for something; not everyone feels this strongly and that's okay). Each of us has natural affinities and dislikes. I got curious about mine after hearing others talk about investing in what you know or love. Of course, I quickly realized it's not the right investing strategy for everyone; just because you love something doesn't mean it's a good investment. Still, it can be an interesting exercise to consider investing ideas that are part of our everyday routine. For example, I'm an avid consumer and pay close attention to various brands and retailers. I think I've got a pretty good feel for consumer-goods companies, far better than commodities or bio-tech, for example. It's fun to check out potential investment ideas within those parameters.

Identify what you care about

Investing in what matters most to me helps me deal with the emotions that come with market fluctuations and market cycles. Choosing our own investments means we can structure our portfolios to reflect our personal values. Like academic foundations and other large institutional investors, you may like to craft a sort of "investment policy statement" that can include financial goals and the types of investments that can help you reach them. Within those goals, you can find investments that suit you.

Identify what the world needs

I try to be observant about societal trends and business cycles, and consider how they could relate to investing. What are the interests of the next generation of consumers? How are people eating, living, commuting, educating, medicating and entertaining themselves? In a relatively short period of time, we've seen how innovations in all of these areas have been reflected in the stock market performance of both new and established companies.

Identify what you can get paid for

The major goal of investing is to put our money to work for us — at least that's mine. As investors, we get paid in numerous ways. We can get cash flow from dividends, or income from bonds and capital gains. How do you want to get paid? Knowing this can also help guide your investment choices.

On Our Minds is a regular feature written by RBC Direct Investing's Inspired Investor content team.