Today’s Smart Money Question:
(Click the featured times below to jump forward in the episode)
Here Are Just A Handful Of Things You’ll Learn:
You may not know this, but we have a piggy bank campaign throughout the year with clients and friends who want to participate. When we collect the piggy banks, we are giving a pie away. It’s an opportunity for us to see people when they come into the office to get their pie, along with collecting their piggy banks.
We count the change, dollars, and checks, match those funds and donate them to a local charity. It changes every year, but we’re donating to Big Brothers, Big Sisters this year. In the past we’ve supported a local food cupboard, Meals on Wheels, etc.
This made me think about having an abundance mentality, or a glass is half full mentality and how that affects our overall financial life. We have a new COVID variant, and that has affected the markets. Here in Pennsylvania, the public utility commission is warning us about a potentially huge increase in our winter energy costs, as much as 50%.
A client asked me today if I think we’ll see the market pullback, and I said yes. But the reality is we don’t know when that’s going to happen. Whether you’re invested in the market or real estate, and you have monies that are out there and you have the potential for loss, behavioral finance plays a part.
How will you react when those accounts lose value? When the market is doing well, the phone doesn’t ring. When you are looking at your overall investment plan, take into consideration the loss. How will you react?
Studies have shown that behavioral finance, especially when it comes to fear, can be the worst thing for an investor over the long term. What you do, or don’t do, can have a dramatic effect long term.
You need to understand how much risk you’re taking and whether you’re comfortable with it. You have to prepare yourself so you don’t have a knee-jerk reaction.
Listen to the full episode or use the timestamps below to jump to a specific section.
0:57 – Piggy bank pies
3:14 – Abundance mentality
5:42 – How do you handle loss?
6:38 – Talking numbers
7:40 – Recovering from loss
8:11 – Understand your risk
9:30 – Prepare yourself
“Studies have shown that behavioral finance, especially when it comes to fear, can be the worst thing for an investor over the long term.“
-Matt Hausman
Additional Podcast Episodes:
- Taking a Deal Down to the Studs
- The Fear of Spending Money in Retirement
- How Much Money Do I Need to Retire?
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The host: Matt Hausman – Contact – Resources – Call: 610-719-3003
