As Behavioral Advisors, we strongly believe that successful investing results from acting toward the achievement of your goals and not reacting to the current news or heaven forbid someone’s market forecast (better described as guesses). There are also other behaviors which negatively impact the investment outcomes for people. The largest behavioral factor is allowing emotional feelings to cloud one’s decision-making with regard to an investment.
This is common when we inherit a property or individual stocks and add the feelings for the donor into the financial decision. Instead of looking at the inherited gift as money received from a loved one, we often end up placing emotions on the asset. This often results in a less than ideal investment decision being made. Granted – a nice problem to have; but a problem none the less.
Carl Richards, who has written an excellent book called the “Behavior Gap” dealing with behavior and financial planning, has put together a video which highlights this common problem. Clink on the button to view this 4 minute video. As Carl Richards states, “It comes down to being open, being willing to ask the questions and being willing to assess if your needs have changed. Yes, it’s hard to not get caught up in the past or get tangled up in our emotions, but don’t cheat yourself out of financial success because you feel sheepish talking about your feelings.”
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