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Warren Buffett is the most successful investor in the world.
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Not only has he posted record high returns, Buffet has also managed this over a time period of over 60 years.
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It's a testament to Buffett's ability to think long term.
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But Buffett doesn't just spend his time thinking about securities either.
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He spends a great deal of time thinking about how we can live better.
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We see this in an anecdote from one of Buffett's employees. The story goes that Buffett one day approaches
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his pilot, Mike Flint, after realising that Flint had worked for him for the past 10 years.
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He wants to discuss Flint's career goals and how he can help him achieve them.
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“The fact that you're still working for me”, Buffett jokes, “tells me I'm not doing my job.”
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To map out his goals, Flint was asked by his
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employer to conduct a simple exercise. It would change the way he viewed his priorities forever.
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The first step in this exercise was to
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list down 25 things that Flint wanted to accomplish in the foreseeable future. Nothing was off the table.
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Secondly, Flint was to rank these items in
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order of importance and circle the top five. Prioritising his goals was more undoubtedly
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challenging than listing them, but Flint managed it.
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Just when it appears as though the most challenging part of the exercise was over,
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Buffett asks Flint a seemingly simple question: “what are you going to do with the remaining 20 items?”
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“Well the top five are my primary focus
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but the other twenty come in at a close second”, Flint explained.
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He goes on, “They are still important so I'll work on those intermittently as I see fit as I'm getting through my top five.
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They are not as urgent but I still plan to give them dedicated effort.”
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At this point, Buffett's expression changes a little. He responds sternly:
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“No. You've got it wrong. Everything you didn't circle just became your Avoid-At-All-Cost list.
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No matter what, these things get no attention from you until you've succeeded
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with your top 5.” Avoid at all cost?
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Flint certainly wasn't expecting that. There's more competition for our attention than ever.
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Choices have never been more abundant than
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at any other time in history and it's unlikely we'll be constrained anytime soon. In fact,
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our options are likely only going to expand as we advance further into our careers.
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It's the primary reason why most of us will never reach the level of competency needed
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to reap the rewards of being a superstar. Each time we pursue a new course of action, we incur an opportunity cost.
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It takes our time and attention away from the things that
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are most important to us. Your odds of success improve when you direct
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your focus into a singular pursuit. You have to double down on a few things and rack up
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the hours trying to get really good at that. It's what Cal Newport calls the craftsman
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mindset in So Good They Can't Ignore You. Craftsmen often start off as apprentices to
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a master and spend years learning the basics. They then become journeymen, where they add
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their own style and tastes to create work with little nuances. That's when they finally
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attain mastery. They don't get distracted by the latest
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fad or jump from one interest to another. Spending time on a singular focus helps them
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get the important things done. Buffett spoke about the 5/25 rule in relation
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to career goals, but I think it extends far beyond that. We can attain the same results
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if we apply it to our health, relationships, and personal goals.
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The corollary seems to be that we're forced to lead boring lives without options,
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but that's not true. The 5/25 rule's only requirement is that you finish the top five
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items before moving on to item 6 and beyond. Think about all the things you have wanted to do.
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You might want to master another language.
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Play a musical instrument. Start your own business. Practise a new martial art.
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Travel around the world. But for most of us, we never really make any progress.
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It's a sign that these items on the list aren't really important to us.
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Most of us pick these items because they provide some form of benefit.
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And while they are nice, they don't sufficiently motivate us to follow through.
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For example, it's cool to be able to speak
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10 different languages, but spending your weekends learning the rules of grammar is not very exciting.
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Because it's not too high on the list of our priorities —
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work and family are more important than being a polyglot — we do this only in our spare time.
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That effectively means a single goal can take months, if not years, to ever accomplish.
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The result is that we have a list of items that will almost never get completed.
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This list only weighs on our mind, and fills us with stress, guilt and overwhelm.
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It's a result of the “any benefit” mindset. Pareto's principle — better known
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as the 80/20 rule — tells us that the majority of outcomes are driven by a small number of things that we do.
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Chances are that anything that falls outside your top five
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will have little impact on your life. Rather than add on, take the time to eliminate.
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The 5/25 rule is yet another example of how simplicity makes life better and easier.
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Time and attention are two of the most finite resources in the world.
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There will be more good opportunities than we realistically have time for.
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We shouldn't be quick to pounce on every one of them, because not all will be right for us.
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It doesn't matter how good an opportunity is if all it does is advance goal number 25 for us.
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If we force ourselves to eliminate our options, we quickly find that only a few things truly matter to us.
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We would be best served if we ignore distractions and do more of what really matters.