Investor, Selfie Thyself | Financial Planning Chapel Hill l Old Peak Financial Advisors

Investor, Selfie Thyself

May 26, 2014

Old Peak Finance - Investor, Selfie Thyself

Investor, Selfie Thyself

May 26, 2014

At a recent dinner table conversation on selfies, I was struck by the irony that, in our selfie-saturated world, we seldom take selfies of our investments. But we should. A successful investor knows how he or she has done. If you don’t, you are likely to be in the majority of investors with an unflattering self-portrait.

The evidence comes from DALBAR, an independent research company that has tracked individual investor returns for 40 years. Their annual survey, recently released, shows yet again that individual investors woefully under-perform the stock and bond markets. The results are below:

Why do investors annually do 4-5% worse than the market, earning returns little better than inflation? The average investor buys near the top and sells near the bottom. How to avoid this? The first step to solving a problem is acknowledging it. That’s where the selfie comes in. The next step is to make a plan — critically, what percentage of stocks vs. bonds you will own — and stick to it, regardless of the markets. If you can do it by yourself, great. If not, find an adviser. Either way, commit to controlling your emotions and to keeping score.

Selfies — taken by many, mocked by more — can actually serve a useful purpose. Well … occasionally.

This article is not intended to provide tax, legal, accounting, financial, or professional advice. Readers should seek advice from qualified professionals who can review their specific circumstances. Old Peak Finance endeavors to provide information that is accurate and current. However, we cannot guarantee that this information has not been outdated or otherwise rendered incorrect by new research, legislation, or other changes. Old Peak Finance has no liability or responsibility to any individual or entity with respect to losses or damages caused or alleged to be caused, directly or indirectly, by the information contained on this website.

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