Investing for Life’s Unknown Unknowns

Saving and Investing for Life’s Unknown Unknowns

In our work with clients, we have built hundreds of financial plans for real families. Good planning captures the knowns, and it even allows room for the “known unknowns”, things we can reasonably anticipate but cannot price precisely. That might include essential and non essential spending, a buffer for potential medical costs, and the bucket list goals people want to enjoy along the way.

But as the saying goes, man plans and God laughs.

There is another category that rarely features neatly in spreadsheets, the “unknown unknowns”. By definition, they are the things you cannot see coming. Which raises the obvious question, can you plan for something you cannot plan for?

Not perfectly. But you can build resilience.

Why we do not cap the plan at the finish line

One conclusion we have reached, after watching people’s lives unfold and seeing their investment journeys up close, is this. Curtailing someone’s investment returns because the numbers say they will probably get over the financial finish line can be short sighted.

Not because goals are unimportant. They are. But because life has a habit of changing the question.

What matters is not just whether a plan works on paper. It is whether it still works when the unexpected happens.

Wealth for its own sake, or wealth for resilience

It is easy to hear “build more wealth” and assume it is about accumulation for the sake of it. In practice, it is often about freedom, options, and resilience.

We do not know what financial shocks you, your family, or your friends may face in the future. We have seen plenty arrive without warning.

One of the biggest “unknowns” we have seen is parents supporting adult children through divorce or separation. This is not a rare one off, and it is not going away. Another is unexpected health issues that require more money, more flexibility, or more time off work than the plan predicted.

A traditional plan aims to meet specific goals. A resilient plan builds a margin of safety beyond those goals. That extra cushion can give you confidence when life pulls you off the original route. And if you never need it, it can still do something useful, supporting family, or helping causes you care about.

Why investing matters in this conversation

If the aim is resilience, you need a vehicle that has historically rewarded patience, and has the potential to outpace inflation over the long term.

One way to think about the stock market is this. It is human ingenuity, captured. It is the mechanism for owning shares in the great companies of the world. Their ability to grow revenues, profits, and dividends has been a major driver of wealth creation over time.

That does not remove risk, and it does not guarantee outcomes. But it is a powerful force for building long term purchasing power, which is exactly what many “unknown unknowns” require when they show up.

Guessing at the unknowns, without pretending to predict them

As investors, we are always making decisions with imperfect information. The goal is not to predict the future perfectly, it is to prepare for a range of futures reasonably.

Life rarely unfolds as we imagine, so building a margin of safety into your planning is one of the best ways of reducing the fragility of a plan.

This is also where experienced advice can help. We cannot tell you what will happen next, but we can talk through the types of scenarios we have seen other clients encounter. That can help you develop a more realistic sense of what “life happening” looks like in financial terms, and it often motivates people to take wealth creation seriously while there is time to do it properly.

Our job is not just about helping you build wealth. It is about cultivating preparedness for the unknown, so you are better equipped to weather life’s unpredictable storms. An essential part of that is admitting we cannot know what is coming.

A more useful aim than certainty

The “unknown unknowns” may never be fully accounted for. But a proactive, adaptable approach can put you in a stronger position to handle whatever challenges arise, without panic, and without having to make rushed financial decisions at the worst possible moment.

As financial author Morgan Housel puts it, “Saving is a hedge against life’s inevitable ability to surprise the hell out of you at the worst possible moment.”

If you would like to talk through what resilience could look like in your own plan, we offer a free initial consultation. It is simply a chance to explore your situation, your goals, and whether building a larger margin of safety makes sense for you.