Monday, February 2, 2015

Intuition Is Really Bad for Your Investment Portfolio

Intuition Is Really Bad for Your Investment Portfolio

Obviously, I cannot claim that intuition is flat out bad. I am aware that our creator gave it to us for a reason. But based on what I know and have actually witnessed in my years of being in the trenches with folks as it relates to investing and retirement planning, I can unequivocally tell you, without any restrictions whatsoever, that it’s not the best idea to use intuition for building your investment portfolio.

In fact, I have seen it destroy folks’ livelihoods, firsthand. Just this past week, I met with someone who, in her own words is really disappointed and scaredabout the outcome of her investments over the past 20 years. For two decades, she’s been diligently investing, expecting that she would be fine for retirement. All of a sudden, she finds herself at the crossroads of retirement, now realizing that her efforts have yielded terrible results.

My question was how she and her advisor had made decisions surrounding which funds to invest in - the stocks and bonds mixes, and why. Her answer: “I just picked those funds that I thought would do well. My advisor showed me the options, and I chose the ones I thought where good funds, based on the performance history. Then, from time to time, we switch funds when they don’t live up to my expectations.”

That should sound pretty normal and familiar. Isn’t this exactly how most people are investing today? But here is the problem. It is a surefire way to go broke in retirement. And that’s simply because making decisions this way is based purely on instinctive feeling, rather than facts and conscious reasoning. Contrary to what you may think or even believe to be true, investing shouldn’t be a guessing game because 9.5 out of 10 times, you are bound to guess incorrectly.

If you don’t know exactly why your portfolio is arranged the way it is, your expected return overtime, and the level of volatility associated with it, I am afraid that you are on a very slippery slope.

Would you expect a good medical doctor, mechanic, plumber, or any other professional, for that matter, to deliver good results purely based on intuition (as opposed to meticulous, conscious reasoning based on provable science)? Of course not.

So do you have a justifiable, realistic basis that explains the composition of your investment portfolio? Or has it all been left up to intuition – whether that of your financial advisor or yourself?

Want real, fact-based information that will give you better results than relying on your intuition? Contact us so that we can help you to objectively evaluate your current situation and make a plan that will yield the results you want. Visit or call 877.656.9111 right now to book your complimentary session.

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