I am constantly reading as I love learning. You can never stop learning, especially when you do my job, as there is always something new to think about, some other way of helping people with their money.
Therefore, I subscribe to Carl Richards newsletters. Carl is an American Financial Adviser and if you have been to our office you will have seen some of his sketches on our walls. Like this one:
So this week he has emailed about whether or not you are a real investor or just pretending to be and I think that it is such a good article that I have stolen it and put some of it below, titled: are you a pretend investor or a real one?
If you are already one of my clients then you will already be a real investor. You know that when the stock markets and your investments go up that it is all my good work and I am amazing, but when it goes down that I have no control over the markets and thatās life!! š
But seriously, have a read through the below and make sure that you are still on track to make the most of your money. Do not get hi-jacked by silly messages.
This is what Carl has to say – 6 points to make sure you are doing the right thing:
- Pretend investors think that financial pornography is real, and therefore, the news ticker scrolling across the television screen represents actionable information.
Real investors know it might be entertaining, like going to the circus. But they would never make a decision because of it.
- Pretend investors think it makes perfect sense to change their investments based on what they hear in the news: Thereās a new president, so act! He doesnāt like the Federal Reserve, so trade! He criticized bankers, so buy bank stocks!
Real investors make changes to their investments based on what happens in their own lives. If their goals change or there is a fundamental change in their financial situation, then they consider making a change in their investments. But they would never make a change based on someone yelling ābuyā or āsellā on a Financial Pornography Network.
- Pretend investors think they need to monitor their investments all the time. (The little supercomputer they carry around in their pockets makes it so easy!)
Real investors know it takes a long time for a tree to grow, and it will not help to dig it up to see if the roots are still there. The same rule applies to investments.
- Pretend investors talk about their investmentsāa lot. They say things like, āIām long this, or short that.ā They use jargon that often does not make sense, though it sounds kind of impressive if you donāt listen too closely. Sometimes they cheer for things like increased consumer spending, higher unemployment, or in some cases, even war.
Real investors understand the difference between the global economy and their personal economy, and choose to focus on the latter.
- Pretend investors worry endlessly about the news in some far-off part of the world and the impact that news will have on their portfolio.
Real investors focus on the things they can control, like saving a bit more next year, keeping their investment costs low, not paying fees unless itās necessary, and managing their behavior by not buying high and selling low.
- Pretend investors complain endlessly about volatility in the markets, and focus on days.
Real investors are focused on enjoying the benefits of the returns the market generates over decades.
