Betting Your Financial Future on Information

If you have a choice to wager your financial future on informative decisions or leading with emotionally charged gut instincts, which would you choose? Gut decisions earn a rightful place in particular areas of life, however in financial matters facts and information often reign supreme.

The Problem with Gut Decisions

Most gut decisions stem from a stream of emotions forming the decision. A well-known investing phrase “Buy low, sell high,” can easily become embedded in investor minds, allowing decisions without much basis. What happens when fear and anxiety drives an investor to trade away a dropping stock presumably before it goes down further, only to have those very investments regain their footing a few days later, or vice versa? What if an investor excitedly snatches up what appears to be cheap investment, only to find there was good reason for them to be cheap! Emotions can cause a “buy low, sell high” strategy to turn into a “buy high, sell low” strategy. In their article “Uncertainty Not All Bad” economists Brain Westbury and Robert Stein say it best, “In free-market capitalism, uncertainty is a feature, not a bug”.

We should embrace the uncertainties of investing, but with clear-headed, informed mindsets. Granted, even with substantial financial research, inopportune investments could happen to the savviest of investors, but at least an information-driven investment can be rationalized more thoughtfully than an emotionally driven one. Hindsight is always 20/20, which is why it might help to have someone on your side with some experience.

What Does It Mean to Be Financially Informed?

Being financially informed means understanding your investment options then choosing the routes towards possibly securing your financial goals. There can be a great deal of information to decipher, that’s where a reliable financial advisor might offer valuable advice, and calm any flighty investment feelings.

Take for example the recent Brexit vote, where British citizens of voting age were able to vote on the decision of whether the United Kingdom should leave or remain in the European Union. Leaving the EU won by 52% to 48%. Pro-Brexit citizens cite their choice for allowing the UK more say in their immigration policies and ability to revise trade regulations unencumbered by the EU. Supporters also look towards Switzerland and Norway, thriving countries who chose to never join the EU, as examples of what the UK’s newfound freedom has in store.

The stock market wasn’t as optimistic after the Brexit votes. Worldwide markets declined, then took two days to bounce back to normal trading. What happened? It’s likely at least some investors acted on emotion, fearing UK based businesses will plummet. Investing needs to be approached thoughtfully: Brexit means the UK can now seek free trade agreements on their own accord, to include agreements with the US and Canada. They are essentially cut free from the EU’s bureaucratic measures, not necessarily a bad arrangement, nor necessarily a predictor of economic ruin.

Hindsight is always 20/20, but it’s present day decisions that dictate one’s future. Are you going to let emotion-riddled gut decisions dictate your retirement investments, or back up rational decisions with information? Tackling financial decisions with a partner can help, especially one who can calmly steer you through financial storms.

Whether you have a dollar or a million dollars in your retirement account you will be able to explore the value of a real advisor simply by visiting the Self Directed Brokerage Account advisor contact site. From this site you can begin to take advantage of the features of your retirement plan.  If you wish you can also download a fact finder sheet that can be used to create your personal retirement financial plan.

Securities and advisory services offered through Independent Financial Group, LLC (IFG). Member FINRA/SIPC. Symphony Financial and IFG are not affiliated.

To learn more about Rick Willoughby, view his Paladin Registry research report.  

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