Tuesday, May 26, 2015

How to Keep Your Emotions from Interfering with Your Investment Decisions

How to keep your emotions from interfering with your investment decisions 

A lot has been said about the need to keep emotions out of your investment portfolio simply because, as we all know, emotion-based decisions almost always breaks all the rules of sound judgement. This, in turn, leads to poor choices/actions and ultimately disastrous results.

 I believe there is a lot of truth to that hypothesis and have, in fact, witnessed this first hand over the course of my almost two-decade career working with hundreds of folks: whenever emotions lead the way, bad choices usually follow.

What makes things even worse for us in todays technologically advanced age is that we have access to all sorts of information and can always find some article, TV show, blog post, or radio guru that supports our emotional leanings.

So how do we bridge the gap as investors? How can we avoid making investment decisions based solely on emotions?

Here’s the thing. I don't think it is humanly possible to keep one’s emotions entirely out of our investment decisions. We are always going to be human. I mean you turn on the TV or hear on the radio that a certain stock is raising the roof, and that is just the beginning. Your next move is likely to get your advisor on the phone to demand that you get in on that “hot action.”

But there’s a rather simple approach to getting around this issue. You must work with an experienced advisor who knows what he or she is doing to devise an investment strategy you can live with based on your specific individual objectives. This is crucial, because it is where you set the rules of engagement, so to speak. Prior to investing even a single penny, you should sit with your advisor for an objective, neutral assessment of your investment strategy. Ask as many questions as you need to so that you understand all the likely possibilities, as well as defining the variables that may cause things to change.

Going forward, it will be your advisor’s job to hold you to that operating strategy when your emotions come calling. Absent of such clearly defined “rules of engagement,” a news segment about today’s hottest stocks may mean it’s open season on your investments, making them subject to your emotions and vulnerable to some less-than-optimal decision-making.
If you'd like to avoid falling into the trap of investing by emotion, visit LaserFG.com or call 877.656.9111 right now to book your complimentary session with a seasoned financial professional with a proven track record who can help you create the Rules of Engagement to see you through to the financial future you desire.

Monday, May 11, 2015

Is It Time to Swap Your Financial Advisor for a Financial Coach?

Is it time to swap your financial advisor for a financial coach?

Obviously when it comes to financial planning – and retirement investing, in particular – no one sets out to fail. We all want the same outcome: to be successful by making as much money as is humanly possible so that we can live the golden years of our dreams. So how is it, then, that only a tiny minority make it to this promised land in reality? The vast majority fail miserably, missing the mark by terribly wide margins.

Of course, one could cite a myriad of explanations and causes for this unfortunate situation. Personally, I believe the reasons most often cited are just symptoms of one main underlying cause. So let’s dig deeper and get to the actual root cause.

Most so-called financial advisors allow their clients to dictate how their portfolios should be allocated, down to the minutest details. On top of that, clients may call any time to mandate changes to their underlying asset mix, and most advisors willingly comply. I understand how, as an investor, this may appear as giving you control over your hard-earned money, but that’s not what this is about at all. If your advisor is letting you dictate all the details, you are on a very slippery slope.

Here’s why. As an investor, in 9.9 out of 10 instances, you’re bound to react based on something you hear or see in the media or read in a magazine or on a website – and this tendency is more rampant in today’s information age than ever before. You get excited and want to make changes to your portfolio that you perceive to be advantageous. While this is an understandable natural tendency, when it comes your investment portfolio, it is precisely the wrong move and the surest way to destroy your wealth.

This past week, one of our clients reminded me of an interesting encounter we had some years back. He wanted to change his portfolio allocations to include something that was being discussed everywhere in the media at the time as THE thing to do to hit the investment jackpot. In my professional opinion, it was a bad move so I refused to do it. Of course, he was free to move his portfolio elsewhere, and I’m pretty sure it would have been easy enough for him to find an advisor who’d do whatever he wanted. Long story short, seven years later, he thanked me for taking a strong stand to protect his investments. In hindsight, the move he wanted me to make would have been a very expensive mistake with devastating consequences to his retirement income.  

Situations like these are the reason you need what I term a financial coach instead of an advisor who will just go along and let you do whatever you perceive to be the right thing, even if it breaks the rules of prudent investing. What, exactly, is the role your financial advisor is playing? Helping you to make prudent decisions and preventing potentially destructive behavior? Or just making you happy by doing whatever you perceive to be the right move?
If you're ready to swap your financial advisor for a seasoned coach with a proven track record who will give you guidance to help  you achieve a secure financial future, visit LaserFG.com or call 877.656.9111 right now to book your complimentary session.