25 Things You Should Never Do With Your Money
.25 Things You Should Never Do With Your Money
Roger Wohlner August 28, 2020·
There is possibly an endless list of things you shouldn’t do with your money. But from bad habits to decisions based on wishful thinking, some of the bigger missteps can really cost you. To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.
Never Cash Your Paycheck Right Away
If you cash your paycheck right away, you might burn through it too quickly. “You will most certainly spend it all if you cash your paycheck rather than have your employer directly deposit it into your bank account,” said Barbara Friedberg, a personal finance consultant. “Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”
One advantage of having a workplace retirement plan, such as a 401(k), is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it. You can use a budgeting template to get the most mileage out of your paycheck.
25 Things You Should Never Do With Your Money
Roger Wohlner August 28, 2020·
There is possibly an endless list of things you shouldn’t do with your money. But from bad habits to decisions based on wishful thinking, some of the bigger missteps can really cost you. To find out the biggest money mistakes you should avoid, GOBankingRates asked financial experts for their best advice.
Never Cash Your Paycheck Right Away
If you cash your paycheck right away, you might burn through it too quickly. “You will most certainly spend it all if you cash your paycheck rather than have your employer directly deposit it into your bank account,” said Barbara Friedberg, a personal finance consultant. “Even better is to automatically transfer a percent of your paycheck into a retirement investment account and direct-deposit the remainder into a bank account.”
One advantage of having a workplace retirement plan, such as a 401(k), is that money is automatically deducted from your pay and invested. You don’t see it, so you won’t spend it. You can use a budgeting template to get the most mileage out of your paycheck.
Never Fall For 'Special' Finance Deals You Can’t Afford
Promotional finance offers that provide zero or low interest rates on a big purchase might sound like a great deal — until you wind up paying more than you expected. That’s what happened to Grayson Bell, founder of personal finance website Debt Roundup.
“Don’t finance a new vehicle, or watercraft in my case, based on the low promotional monthly payment,” he said. “I financed a new $10,000 Jet Ski with no money down and no real way to pay for it based on a radio ad promoting a super low $69 per month payment. What I didn’t read was the rate was only for two years, then it changes to include retroactive interest based on the loan amount.”
“Those financing deals can ruin you if you’re only looking at the monthly payment,” he continued. “Go through the math and read all of the fine print. They get you in with the low monthly payments, but keep you paying for much longer than you anticipated.”
Never Co-Sign a Loan You Can’t Afford
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/21-things-never-money-100016441.html
20 Worst Money Mistakes People Make in the Name of Love
.20 Worst Money Mistakes People Make in the Name of Love
Don't let finances ruin your romance.
By Andrew Lisa August 25, 2020
While it’s true that love might not cost a thing, plenty of romances fall victim to money — or at least to money mistakes. Money and relationships are inseparable, and if you mismanage the former, the latter hardly stands a chance. From secrecy and poor communication to conflicting priorities and plain old bad decisions, some of the best relationship advice helps two people avoid the pitfalls of money mistakes in romance. Find out if you and your partner are making common money mistakes, and discover how these mistakes can hurt your relationship.
Keeping Money a Secret
It’s important to be open about money as it is to be open about even the most intimate aspects of your love life.
20 Worst Money Mistakes People Make in the Name of Love
Don't let finances ruin your romance.
By Andrew Lisa August 25, 2020
While it’s true that love might not cost a thing, plenty of romances fall victim to money — or at least to money mistakes. Money and relationships are inseparable, and if you mismanage the former, the latter hardly stands a chance. From secrecy and poor communication to conflicting priorities and plain old bad decisions, some of the best relationship advice helps two people avoid the pitfalls of money mistakes in romance. Find out if you and your partner are making common money mistakes, and discover how these mistakes can hurt your relationship.
Keeping Money a Secret
It’s important to be open about money as it is to be open about even the most intimate aspects of your love life.
“Couples are more comfortable discussing sex than money,” said Neale Godfrey, chairman and president of Children’s Financial Network. “They need to be comfortable with both. They should come clean with each other about assets, debt, income and expenses. They also need to set their goals together.” Avoiding money conversations can result in a change in the relationship’s power dymanic.
Leaving Financial Responsibilities to Just One Partner
It takes two to tango — and this has never been truer than when it comes to financial heavy lifting. This includes paying the bills and the management of investments. “Both partners need to have a clear handle on the inflows and outflows of money,” Godfrey said. “Even if you hate paying bills, do it.”
Concealing Your ‘Financial Personality’
Being real about who you are and accepting the other person as he or she is can mean the difference between relationship success and couple catastrophe — especially where money is concerned.
To continue reading, please go to the original article here:
https://www.gobankingrates.com/saving-money/relationships/worst-money-mistakes-couples-make/
Why I Talk Openly About My Money Mistakes
.Why I Talk Openly About My Money Mistakes
Talking about money is an enduring taboo. It shouldn't be.
By Nicole Spector February 9, 2021
Americans are very good at spending money, but not so good at talking about it. Sure, people will mention being broke or having just gotten paid. But discussing hard truths about money — like the mistakes we’ve made with spending, or the distinct path we’re on to save more in the years ahead — isn’t normal social conversation.
The subject of money isn’t as forbidden as it was in say, the 1950s, thanks to an escalation of awareness around issues such as pay transparency and the gender wage gap. But it’s still not embraced as a regular part of the conversation. As a March 2020 article in the Atlantic noted, the topic of finances is taboo partly because money (or lack of it) can make us feel bad — and who wants to talk about bad stuff?
To answer that question, financial blog author Peti Morgan wants to talk about money. More specifically, she wants to talk about her money mistakes and the valuable lessons she learned as a result of those mistakes. And Morgan had quite a few money problems not too long ago.
Why I Talk Openly About My Money Mistakes
Talking about money is an enduring taboo. It shouldn't be.
By Nicole Spector February 9, 2021
Americans are very good at spending money, but not so good at talking about it. Sure, people will mention being broke or having just gotten paid. But discussing hard truths about money — like the mistakes we’ve made with spending, or the distinct path we’re on to save more in the years ahead — isn’t normal social conversation.
The subject of money isn’t as forbidden as it was in say, the 1950s, thanks to an escalation of awareness around issues such as pay transparency and the gender wage gap. But it’s still not embraced as a regular part of the conversation. As a March 2020 article in the Atlantic noted, the topic of finances is taboo partly because money (or lack of it) can make us feel bad — and who wants to talk about bad stuff?
To answer that question, financial blog author Peti Morgan wants to talk about money. More specifically, she wants to talk about her money mistakes and the valuable lessons she learned as a result of those mistakes. And Morgan had quite a few money problems not too long ago.
Opening Up About Money Can Be Terrifying at First
As the founder of the Leveraged Mama financial blog, podcaster and online business coach, Morgan discovered that the best way to tackle your financial problems is to treat them like any other problem — starting with admitting you have a problem in the first place.
A year ago, prior to embarking on her financial blogging journey, Morgan was ashamed of just how deep into debt she’d found herself. She was possibly even more ashamed to talk openly about it.
“I was worried that setting off on this journey so publicly would mean the loss of respect, pride and friends,” she said. “I knew that by sharing (about my failures), people I knew personally would find out about all the stupid things I had done with my money. I could lose respect. I could lose friends.”
But owning her problems and failures was, for Morgan, the only true way to overcome them.
“I had to stand up and declare to anyone who cared to read about me that I had failed,” she said. “I knew that I needed to be honest about how much debt I was in, and how I got into that much debt.”
To continue reading, please go to the original article here:
https://www.gobankingrates.com/saving-money/savings-advice/why-talk-about-money-mistakes/
12 Essential Money Tips for Every Phase of Your Financial Life
.12 Essential Money Tips for Every Phase of Your Financial Life
By Gabrielle Olya
Get The Secrets Money Experts Want You To Know.
Everyone makes money missteps at some point in their lives, whether it’s splurging on unnecessary items or neglecting to contribute to retirement funds as soon as possible. Even financial pros are not immune to making mistakes. To help you avoid unnecessary pitfalls, check out these tips and tricks that can help you live your best money life — no matter your age.
Start With Saving
More than half of Americans have less than $1,000 in savings, a 2019 GOBankingRates survey found. Although it’s tempting to spend rather than save when you get a paycheck, it’s important to prioritize putting money away into your checking or savings account. On top of that, you should also use the right checking or savings accounts to grow your money.
12 Essential Money Tips for Every Phase of Your Financial Life
By Gabrielle Olya
Get The Secrets Money Experts Want You To Know.
Everyone makes money missteps at some point in their lives, whether it’s splurging on unnecessary items or neglecting to contribute to retirement funds as soon as possible. Even financial pros are not immune to making mistakes. To help you avoid unnecessary pitfalls, check out these tips and tricks that can help you live your best money life — no matter your age.
Start With Saving
More than half of Americans have less than $1,000 in savings, a 2019 GOBankingRates survey found. Although it’s tempting to spend rather than save when you get a paycheck, it’s important to prioritize putting money away into your checking or savings account. On top of that, you should also use the right checking or savings accounts to grow your money.
Avoid Lifestyle Inflation
It’s important to increase your savings rate whenever you start earning more in order to keep growing your net worth. “Save one-third of every pay raise you get so you don’t succumb to lifestyle inflation,” said Ted Jenkin, a certified financial planner. By starting this practice early in your career, you’ll develop good habits like saving, investing and paying down debts instead of spending it on more stuff you won’t care about in a few years’ time.
Don't Waste Your Money on Things You Don't Need
Whether you’ve just received your first paycheck or your first raise, it can be tempting to spend your money on things you want rather than on things you need — but this can be a huge mistake.
“Don’t spend so much money on clothing,” said Michelle Schroeder-Gardner, founder of the personal finance blog “Making Sense of Cents.” “I’ve worked full-time since I was around the age of 14, yet I didn’t really start saving money until nearly a decade later.”
To continue reading, please go to the original article here:
10 Simple Habits of Money-Smart Individuals
.10 Simple Habits of Money-Smart Individuals
By Tracie Fobes Last updated: Jan. 20, 2021
Master these successful money habits to boost your wealth.
Mark Cuban. Warren Buffett. Michael Bloomberg. Most people will never be as rich as the world’s wealthiest billionaires, but you can still learn from their smart money habits.
From ditching debt to paying bills on time, fiscally savvy folks have developed good habits and plans that keep them in financial shape. And with a little effort, you too can master their tricks for managing money. If you’re looking to break bad money habits and get on more solid financial footing, follow these fiscal tips from the pros.
10 Simple Habits of Money-Smart Individuals
By Tracie Fobes Last updated: Jan. 20, 2021
Master these successful money habits to boost your wealth.
Mark Cuban. Warren Buffett. Michael Bloomberg. Most people will never be as rich as the world’s wealthiest billionaires, but you can still learn from their smart money habits.
From ditching debt to paying bills on time, fiscally savvy folks have developed good habits and plans that keep them in financial shape. And with a little effort, you too can master their tricks for managing money. If you’re looking to break bad money habits and get on more solid financial footing, follow these fiscal tips from the pros.
Have a Written Budget
Many people have a budget — sort of. They know who they have to pay each month and how much. However, they don’t have anything in writing. When you have a written budget, you see exactly where your money is going. Best of all, you can direct your money where you want it to go.
Your budget is your roadmap to financial success, so make sure you include every single expense. Don’t forget about that coffee you grab on the way to work or the money you spend on parking every day.
Pay Down Debt
Take the steps necessary to pay off your debts. You will need to create a debt payoff plan to make it happen.
Start by assessing the types of debt you carry and determining what might be paid off first. Your credit card debt should be the first thing you look at. In addition to possibly carrying a high interest rate, it typically has variable rates. Because credit cards are revolving debt, if you only make the minimum payment required each month, you may not be able to pin down an end date for your debt.
To continue reading, please go to the original article here:
5 Major Money Mistakes To Avoid Once You Turn 60
.5 Major Money Mistakes To Avoid Once You Turn 60
Laura Woods Mon, February 15, 2021
You’ve been working hard your entire adult life and you’re finally nearing retirement. The prospect of having more time to relax and enjoy yourself is exciting, but you’ll need money to do that. As you wrap up your peak earning years and prepare to step away from the workforce, it’s important to make smart money moves that will protect your nest egg. All it takes is one poor financial choice to throw a wrench in your plans — and financial stability — so take the time to make informed decisions.
When faced with a large amount of cash, it can be tempting to share it with loved ones — i.e., your children — or indulge yourself with luxury items. However, this money needs to last your entire retirement, which could span decades. Here’s a look at common financial blunders you don’t want to make as you get older if you want to avoid a major financial setback.
5 Major Money Mistakes To Avoid Once You Turn 60
Laura Woods Mon, February 15, 2021
You’ve been working hard your entire adult life and you’re finally nearing retirement. The prospect of having more time to relax and enjoy yourself is exciting, but you’ll need money to do that. As you wrap up your peak earning years and prepare to step away from the workforce, it’s important to make smart money moves that will protect your nest egg. All it takes is one poor financial choice to throw a wrench in your plans — and financial stability — so take the time to make informed decisions.
When faced with a large amount of cash, it can be tempting to share it with loved ones — i.e., your children — or indulge yourself with luxury items. However, this money needs to last your entire retirement, which could span decades. Here’s a look at common financial blunders you don’t want to make as you get older if you want to avoid a major financial setback.
Collecting Social Security Benefits Too Soon
Many people make the mistake of taking Social Security income as soon as they can because it’s available. Others start early because they’re afraid the system will run out of money. Neither approach is the best way to maximize benefits.
“You receive more each month if you wait until your full retirement age, and you can even get increases after that — amounting to roughly 8% per year until you’re 70,” said Justin Pritchard, CFP, founder of Approach Financial, Inc. in Montrose, Colorado.
Having patience can literally pay off.
“Instead of claiming as soon as possible, run some numbers to determine how much you’ll earn if you wait,” he said. “Remember that a surviving spouse who takes over your benefit will be affected by your decision, so choose carefully.”
Cashing Out a Retirement Account
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/5-major-money-mistakes-avoid-170054937.html
7 Millennial Money Struggles — And How To Start Dealing With Them
.7 Millennial Money Struggles — And How To Start Dealing With Them
Serah Louis Sat, February 13, 2021
Americans are carrying about $1.7 trillion in student debt and millennials hold a large portion of that figure. As President Biden touts plans and priomises for student loan forgiveness, millennials wait with bated breath for much-needed relief. Student loans play a huge part, but there are more financial worries that plague millennials. These struggles have been made considerably worse as COVID-19 continues to decimate several industries.
But, whether it’s the student loans or mortgage payments, there are plenty of ways to start getting your financial problems under control while starting to save for the future. Here are seven common millennial money hardships — and what you can do about them.
7 Millennial Money Struggles — And How To Start Dealing With Them
Serah Louis Sat, February 13, 2021
Americans are carrying about $1.7 trillion in student debt and millennials hold a large portion of that figure. As President Biden touts plans and priomises for student loan forgiveness, millennials wait with bated breath for much-needed relief. Student loans play a huge part, but there are more financial worries that plague millennials. These struggles have been made considerably worse as COVID-19 continues to decimate several industries.
But, whether it’s the student loans or mortgage payments, there are plenty of ways to start getting your financial problems under control while starting to save for the future. Here are seven common millennial money hardships — and what you can do about them.
1. Financial crises and fallen wages
Millennials have experienced not one, but two financial crises – the Great Recession of 2008 and the economic downturn prompted by COVID-19.
With an unprecedented number of business closures and layoffs in 2020, plenty of millennials are out of work, or employed with lower wages and poor job security. The 2008 financial crisis has also made it more difficult for the generation as a whole to amass a decent amount of savings.
If you need a side-gig to support your current job, try using an online marketplace where you can post your services to cater to businesses around the world. You can also make money on the side by renting out unused space in your home, or earn rewards when you do your groceries and shop online.
2. Still paying off student loans
The rewards of holding a degree don’t always offset the tuition and board fees (they’ve been upped by over 25% in the past decade) and some graduates are regretting the expenses.
An EducationData.org report shows that student loan debt hit almost $1.6 trillion in 2020. And over a quarter of millennials say college “definitely” wasn’t worth the debt, according to a Morning Consult survey.
Make sure to check whether you qualify for an income-driven repayment plan or public service loan forgiveness. If not, consider refinancing or rolling all your debts into a consolidation loan.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/7-millennial-money-struggles-start-200000765.html
7 Thought-Provoking Lessons From Socrates
.7 Thought-Provoking Lessons From Socrates, That Will Show You A Better Way Of Living
A better way to improve your life if you follow these lessons from Socrates. Socrates was a Greek philosopher, an enigmatic genius- A genius who gave a whole new norm to the Western philosophy.
The standard set by him, his critical reasoning, his view on life and surrounding made him an admirable inspiration to many who came across his teachings, and also had accusers who eventually put him to trial and execution.
Socrates lived an impoverished life. Despite being such a significant figure in philosophy, he never left a word about himself. Although we know little about his life except for the information recorded by his students, including Plato, what we do know makes it clear that he had a unique and powerful philosophy and personality.
Although we live in a world that is different from Socrates time and may be the life we live is much different now but he had to say then still applies on our conquest to get a peaceful and happier life.
7 Thought-Provoking Lessons From Socrates, That Will Show You A Better Way Of Living
A better way to improve your life if you follow these lessons from Socrates. Socrates was a Greek philosopher, an enigmatic genius- A genius who gave a whole new norm to the Western philosophy.
The standard set by him, his critical reasoning, his view on life and surrounding made him an admirable inspiration to many who came across his teachings, and also had accusers who eventually put him to trial and execution.
Socrates lived an impoverished life. Despite being such a significant figure in philosophy, he never left a word about himself. Although we know little about his life except for the information recorded by his students, including Plato, what we do know makes it clear that he had a unique and powerful philosophy and personality.
Although we live in a world that is different from Socrates time and may be the life we live is much different now but he had to say then still applies on our conquest to get a peaceful and happier life.
1. The only true wisdom is knowing that you know nothing.
You can’t learn anything if you think you know it already if you believe you are an expert already and there is nothing more left to learn then you really will have nothing to learn.
Open your mind, realize that you might be wrong or mistaken, and you may be ready to learn. Additionally, no matter how much you know, there is a nearly infinite amount of stuff that you don’t know.
You will come across various people in your life with different experience and knowledge sets, you will meet an industrialist and a beggar on the same day, and you must be curious to learn from both and try and understand the problems of both the people and solve their problems accordingly.
2. Strong minds discuss ideas, average minds discuss events, weak minds discuss people.
Gossiping and engaging in small talk which is not productive and leads you nowhere are works of smaller minds, stronger minds discuss ideas which hold power to introduce change for the betterment of one and all.
My favorite quote from ‘V for Vendetta’ sums it up perfectly.
“Remember, remember, the Fifth of November, the Gunpowder Treason, and Plot. I know of no reason why the Gunpowder Treason Should ever be forgotten… But what of the man? I know his name was Guy Fawkes and I know, in 1605, he attempted to blow up the Houses of Parliament. But who was he really? What was he like?
To continue reading, please go to the original article here:
https://themindsjournal.com/lessons-from-socrates/2/
The ‘Cash on Hand’ Dilemma: How Much Is Too Much?
.The ‘Cash on Hand’ Dilemma: How Much Is Too Much?
Trent Hamm
The idea of having “cash under the mattress” has a lot of appeal to many people. After all, cash is king and having some cash around in a quick pinch can solve a lot of problems.
An older friend of mine used to have a coffee can full of cash that he kept hidden away somewhere in his house. I’m not sure where he kept it, but I saw it produced a time or two and I couldn’t help but notice that it contained a large quantity of cash. He used it to take advantage of opportunities and to take care of things in emergencies.
A professor at the college I attended kept a false bookend in his office. It had a removable bottom and he kept about $1,500 in cash in there in $100 bills – I kid you not. He trusted me enough once to dig into it right in front of me and give me some cash to help me out in a desperate moment, an act that I still appreciate to this day because of the unquestioning generosity behind it. (I was almost completely broke and couldn’t afford the book for his class; I showed up to his first two office hours and he produced a $100 bill for me to buy the class textbook with. That’s just extraordinary generosity.)
The ‘Cash on Hand’ Dilemma: How Much Is Too Much?
Trent Hamm
The idea of having “cash under the mattress” has a lot of appeal to many people. After all, cash is king and having some cash around in a quick pinch can solve a lot of problems.
An older friend of mine used to have a coffee can full of cash that he kept hidden away somewhere in his house. I’m not sure where he kept it, but I saw it produced a time or two and I couldn’t help but notice that it contained a large quantity of cash. He used it to take advantage of opportunities and to take care of things in emergencies.
A professor at the college I attended kept a false bookend in his office. It had a removable bottom and he kept about $1,500 in cash in there in $100 bills – I kid you not. He trusted me enough once to dig into it right in front of me and give me some cash to help me out in a desperate moment, an act that I still appreciate to this day because of the unquestioning generosity behind it. (I was almost completely broke and couldn’t afford the book for his class; I showed up to his first two office hours and he produced a $100 bill for me to buy the class textbook with. That’s just extraordinary generosity.)
Simply having a pool of cash around to tap into at a moment’s notice when a great opportunity appears or when disaster strikes is very worthwhile. Cash is king, after all – it solves problems.
Still, it’s hard to ignore the downside of a practice like this. Cash is untraceable, and once it’s gone, it’s gone. If you lose that cash, it’s gone. If someone steals it from you, it’s gone. If your home or apartment or car is broken into and the cash is taken, it’s gone. If your home or apartment or car burns to the ground, the money is gone.
So, there’s some risk and reward when it comes to holding onto cash. The risk is that risk of losing the money and, theoretically, the small amount of financial gain that might come from investing it elsewhere. The reward is the flexibility and opportunity that comes from having cash on hand at a moment’s notice.
Where’s the tipping point between those factors?
For me, the tipping point is enough cash to make sure my family is fine for three days during a complete natural disaster. I want enough cash to ensure that I can get my family at least 100 miles from home, feed them for three days, and house them for three days and nights. I might tap that cash for other purposes in the heat of the moment, but I replenish back up to that point.
I decided that I wanted to have enough cash available to simply handle this kind of major emergency with no questions asked. I simply produce the cash and we’re on our way.
To continue reading, please go to the original article here:
https://www.thesimpledollar.com/financial-wellness/the-cash-on-hand-dilemma-how-much-is-too-much/
Unfortunate Investing Traits
.Unfortunate Investing Traits
Feb 4, 2021 by Morgan Housel
Napoleon’s definition of a military genius was “The man who can do the average thing when everyone else around him is losing his mind.”
What he meant, I think, is that most wars are lost rather than won. The final outcome is driven more by one side’s blunder than the other’s brilliance. One screw up can overwhelm a dozen smart decisions that preceded it, so even if strategy is crucial the expert is rarely preoccupied asking, “How can I be great?” The obsession is, “How can I ensure I’m at least average and never a disaster during the most important moments?”
And isn’t investing the same?
Most of this industry is devoted to finding greatness, which is inevitable because it’s what captures attention. But an occasional great decision can quickly become irrelevant unless you consistently avoid the blunders that move the needle even more. It’s not exciting, but we should spend more effort on ensuring we’re capable of doing the average thing all the time before we spend a moment trying to do a great thing some of the time.
Unfortunate Investing Traits
Feb 4, 2021 by Morgan Housel
Napoleon’s definition of a military genius was “The man who can do the average thing when everyone else around him is losing his mind.”
What he meant, I think, is that most wars are lost rather than won. The final outcome is driven more by one side’s blunder than the other’s brilliance. One screw up can overwhelm a dozen smart decisions that preceded it, so even if strategy is crucial the expert is rarely preoccupied asking, “How can I be great?” The obsession is, “How can I ensure I’m at least average and never a disaster during the most important moments?”
And isn’t investing the same?
Most of this industry is devoted to finding greatness, which is inevitable because it’s what captures attention. But an occasional great decision can quickly become irrelevant unless you consistently avoid the blunders that move the needle even more. It’s not exciting, but we should spend more effort on ensuring we’re capable of doing the average thing all the time before we spend a moment trying to do a great thing some of the time.
A few unfortunate traits that commonly prevent investors from doing the average thing:
1. Personalizing wins and externalizing losses.
If you write a piece of computer code and it works, you can take credit for it. It works because you did the right thing. If it doesn’t work, you did the wrong thing. Black and white.
Investing isn’t like that. So many forces collide at once – economics, politics, business, markets, psychology – that there’s more leeway to create a narrative about why something did or didn’t happen. The most common narrative is that wins are caused by your decisions and losses are the consequence of some external force, usually policymakers.
It’s the most comfortable mindset. But it’s a bonanza for overconfidence on one end and ignorance on the other. One reason the financial industry mints so many extraordinary egos is because it’s easy to take personal credit for what works and claim to be a victim of what doesn’t. Industrial engineers can’t simply be in the right place at the right time, or blame their failures on the Federal Reserve. But investors can, and do.
An iron rule of investing is that almost nothing is certain and the best we can do is put the odds of success in our favor. Since we’re working with odds – not certainties – it’s possible to make good decisions that don’t work, bad decisions that work beautifully, and random decisions that may go either way. Few industries are like that, so it’s easy to ignore. But it’s a central feature of markets.
Unless you’ve enjoyed a period of success that you realize you had nothing to do with, or can admit that a long period of loss was due to your own mistake, you’ll have a hard time grasping reality in a way that lets you do at least the average thing when everyone else is losing their minds.
To continue reading, please go to the original article here:
The 3 Most Important Words in Finance
.The 3 Most Important Words in Finance
November 22, 2020 by Ben Carlson
There are generally 3 stages of growth for a successful investor:
Stage 1. I know everything (when you’re first starting out)
Stage 2. I know nothing (after you learn a bit about markets)
Stage 3. I know what I don’t know (after you realize how hard markets are)
That last stage is difficult for many people in the world of finance to figure out. Or even if they admit it to themselves it’s difficult to let clients in on the fact that even the masters of the universe don’t know what’s going to happen next when it comes to the markets.
The 3 Most Important Words in Finance
November 22, 2020 by Ben Carlson
There are generally 3 stages of growth for a successful investor:
Stage 1. I know everything (when you’re first starting out)
Stage 2. I know nothing (after you learn a bit about markets)
Stage 3. I know what I don’t know (after you realize how hard markets are)
That last stage is difficult for many people in the world of finance to figure out. Or even if they admit it to themselves it’s difficult to let clients in on the fact that even the masters of the universe don’t know what’s going to happen next when it comes to the markets.
A number of years ago Jason Zweig interviewed the late Peter Bernstein and asked him some of the most important things he had to unlearn over the course of his career:
Q. Over the course of your career, what are the most important things you’d say you had to unlearn?
A. That I knew what the future held, I guess. That you can figure this thing out. I mean, I’ve become increasingly humble about it over time and comfortable with that. You have to understand that being wrong is part of the process. And I try to shut up at cocktail parties. You have to keep learning that you don’t know, because you find models that work, ways to make money, and then they blow sky-high.
There’s always somebody around who looks smart. I’ve learned that the ones who are the most smart aren’t going to make it. I don’t know anybody who left investing to become an engineer, but I know a lot of engineers who left engineering to become investors. It’s just so infinitely challenging.
When I first started out in the investment business I was always overly impressed with the smartest people in the room who seemed to have it all figured out about what was going to happen with certain stocks or the markets in general.
It took a while but I eventually discovered it was those investors who had enough self-awareness to admit they didn’t know what was going to happen next and they didn’t have all of the answers who were truly intelligent.
The 3 most important words in finance are ………
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