Who do you listen to when you are trying to determine what you should do with your money? It is a powerful question and the answer to the question will likely determine how well you will do financially.
Do you listen to the talking heads on television such as Jim Cramer? Do you watch one of the stock market cable channels like CNBC to get insight and direction? How about Money magazine’s top 10 stocks to buy in a given year?
If you do get information from these sources, have you ever stopped to think:
What do they know about my particular situation?
Do they understand what the size of your current nest egg is, and the amount that you are saving each year? Do they understand the challenges and opportunities that are before you? How about how much money will you need in 20 years to provide income that sustains your lifestyle through retirement?
Since they most likely don’t know anything about you, how does whatever perceived insight that they may have on the markets pertain to you? Maybe you have a 40 year time horizon for a significant part of your money; why should short-term market movements concern you?
It’s a common mistake for investors. They approach investing looking for the product or advice to solve their particular situation without understanding that the sellers of all products believe that everyone should be purchasing from them or listening to them at all times.
It is similar to the standard joke about surgeons. They will more than likely determine the best situation to cure your particular injury is (of course) surgery. The people who you see on television speaking about particular individual stocks or giving advice as far as market timing are just creating demand for themselves.
They want to create an environment where you need to continue to watch the TV show or read the magazine so you know what to do next. We won’t even touch on the actual value of their so-called “advice”.
However, without knowing your particular situation such as what actually is your time horizon (as in when will you need the money), how would they know? They don’t. How does owning the 10 hottest stocks in any given year help toward your long-term needs?
Investors should not approach investing as entertainment. Proper investing should begin with an individually created plan based on clarifying the opportunities that you have in front of you. Specifically, creating financial comfort for you and your family, helping protect your family and possibly building a legacy.
Work with a fee-only behavioral advisor who understands that the only effective plan begins with understanding their clients’ opportunities, needs, wants and concerns. And none of these personal issues is understood by any television market analyst or writer for the national money magazine. Give us a call at Crimmins Wealth Management to begin the process of clarifying your unique journey.
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