For me it has always been slow and steady wins the race. When it comes to financial planning that is. What do I mean by that? I mean over the years I have seen people make all sorts of mistakes with their money in many different types of investments. In this day and age, everybody is an expert and has access to an incredible amount of information.
So what gives? Why do many people fail when it comes to long term investing? For the same reason many fail when it comes to any kind of investing. They either get greedy, they get emotional, or they are uneducated about the actual products they are buying. They make decisions at warp speed with the advice of their top 20 people and websites or gurus and they don’t remain focused and change plans without really knowing what to do! Or they ask everyone in the cubes working near them or all their neighbors what they do with their finances. This is not the way to go!
Here are 4 top ideas to help you remain slow and steady in your investment program:
1) Understand what you are doing. Get educated. Choose your advisor from a trusted referral if possible. Ask him/her as many questions you may have about fees or prepayment penalties or any investment related ideas. While this may sound simple it really isn’t for many folks. They actually often say they are too busy to understand this now. I never can believe this when I hear this. The bottom line is that you are in control of the entire process, so if you choose education, and you take your time, you will plan more efficiently and you will do it with potentially less stress and anxiety. Please don’t overanalyze too much either, just get the facts and make a good, educated decision.
2) Don’t get emotional about your investing. Easier said than done. Just because your neighbor or person who works near your cube at work has a hot new tip doesn’t mean you have to jump on board. You are chasing a dream when you invest that way. Is the investment really right for you just because it is right for them? Is it even right for them in the first place? You emotions should not get in the way of what your long term focus needs to be. So dont get over excited and buy high just to become an investor who asks himself “ How could I let this happen to me” when the investment falters
3) How much risk are you willing to take to get to where you want to be? This is a key factor in any planning situation. You must understand that risk is inherent in any situation. Look, you are not going to get to where you need to be by stuffing the money in the mattress. And there’s risk there too that someone could steal the cash! But you must understand fully how much risk you need to take on to accomplish your goals, and set the plan in motion accordingly. Any extra risk is not recommended
4) Choose an advisor who understands the emotional mindset of the average person and who also looks at the long term himself. There can be no better tip than this!
Listen below to hear Win Damon and I review this very topic on WNBP Radio 1450 and wnbp.com. Win and I have educational financial chats every Tuesaday morning at 8:30!
Stuart Steinberg, CPA, MBA has been dealing with families and their money issues since 1988. He can be reached at 55 Pleasant Street Newburyport and at (978)864-9581 and stu@eaglerockfinancial.net
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.
Advisory Services offered through LPL Financial, a Registered Investment Advisor.
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