Among the many things that set American culture and its economy apart, mobility and flexibility may be the most ingrained. We quickly allocate resources and energy to areas of greatest potential. From our very founding, we have attracted people from around the world who are eager to start a new life. The “boom towns” that have sprung up at every phase of our development are testament to our willingness to move quickly for a new opportunity.

This mobility has deeply affected individual lives and finances. Industry-jumping is quite common, long-distance moves are readily made in the interest of career advancement and local moves are made to upgrade homes and lifestyles to the latest trends. These workforce changes are often warranted by broad economic factors; without job retraining or relocation, many workers in the Rust Belt have little prospect of maintaining their standard of living. (Keep in mind that the Rust Belt was once the greatest boom region in the world.) Still, conventional wisdom holds that moving up and on is the way to get ahead.

Moving on, though, is not without its costs. Moves are very hard on children and personal relationships. Everything from medical care to home repair is more difficult, and more costly, without long-term relationships. (I once had to choose a doctor from the list provided by my medical insurance; I was the only patient in the Russian doctor’s waiting room not wearing a babushka.) Worthwhile community involvement requires participation over time. Job-hopping may seem to have financial advantages, but often at the cost of becoming a recognized expert in your field or firm. Even participation in retirement savings plans is disrupted by job moves, and few people have the discipline to stick with saving in the interim.

Consider trading up to a more expensive home, an attractive move these days. (This example is based on one described by David Cantwell, a contributor to The Daily Reckoning, an investment e-letter.) Imagine a Tucson couple bought a house for $250,000, putting $50,000 down and taking out a mortgage for $200,000. Some years later, they sell this house for $500,000, having “made” $250,000, and buy a bigger home for $600,000, powered by low interest rates. However, they decide to put only $200,000 down on the new house and take on new mortgage debt of $400,000. They use the balance of the money to buy cars, vacations and other things that have no lasting monetary value.

What is the impact of this “gain” on their finances? They have doubled their property tax liability and their mortgage debt. By spending some of their home equity on other items, they have reduced their cash and consequently their net worth. Selling costs for the first house were likely over $30,000, another reduction in their net worth. The greater debt makes them more vulnerable to disruptions in their employment or in the housing market. In exchange for all this, they have a better house and some neat stuff. Are they really better off?

Sound investing is also a victim of restlessness and impatience. Choosing mutual funds based on their recent record, known as chasing performance, is a recipe for disaster; the best-performing funds in any five year period are generally average-performing, or worse, in the next five-year period. Likewise, “momentum investing” in stocks means jumping on board after strong gains have already taken place. And making frequent changes in a portfolio reduces the chance to realize the potential of a good investment, even if it was chosen by coincidence. Indeed, a 2001 study by Dalbar Associates found that over a 16-year period in which the S&P 500 index averaged gains of over 16% a year, the average investor in stock mutual funds gained only 5.32%. The difference was attributed to short-term trading driven by emotion.

In investing, as in employment and housing, a major change can make sense, or may be the only reasonable option. The best results, though, are usually gained by establishing a stable, long-term plan and sticking with it. This approach requires the discipline to resist fads and the willingness to pass up tempting short-term gains in the interest of the greater objective. The core plan can be supplemented with new techniques and experiences that take advantage of the changing environment and keep things interesting.

Isn’t it handy that the same principles apply to money and to life?