Maureen wrote an article for the Fall Edition of the new Bergen County (NJ) magazine Autumn Years asking Will Your Money Last as Long as You Do and now I have written one for the Winter edition. My article deals with the major determinant of investor success – their own behavior.
To drive this point home even further, a funny aside. As anyone who has dealt with producing magazines knows, the editors need to begin to put all of the various pieces together months before it goes to print. So when I drafted this piece it was in early October 2014. As most of you will have already forgotten, October started as a rough month for investors.
The S&P 500 index (tracks the largest 500 U.S. companies) hit record levels by October 8 reaching nearly 2,000. However, during the second week the index declined by almost 6% – in 5 trading days. Some investors sold at these lows. Their behavior resulted in capturing these losses.
So the email came in from the editor during this market decline asking if I needed to update the article to reflect the new data. No. That is the exact opposite message that I am trying to convey.
Now as I write the S&P 500 is above 2,000 after the S&P 500 ended October up 2%. Let’s hope this mini-tutorial on the need to stay disciplined and patient will help “investors” learn to not follow the same bad behavior.
Investors need to set up a plan and the associated portfolio that will give them the best chance – using long-term historic performance results – of achieving their goals. Thus no one who understands this need for a long-term focus should have been worrying about the short-lived October declines. The successful investors have learned their lessons well that the markets have temporary declines – sometimes severe declines – on the journey to permanent increase and new records.
If you are unable to maintain the discipline and patience on your own, work with a coach who can help you relate money to you life. This article highlights a few of the bad behaviors that have hurt individuals as they tried to reach their goals.
Please hit the link below to read the article on Beware of Bad Behaviors that can Hurt your Financial Life beginning on page 24.
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