Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.
Bill Bernstein, author of the “Four Pillars of Investing” (among other things), is both a neurologist and a finance expert. In a news article from over the summer that I somehow missed until now, he provided some guidelines for fighting off your counterproductive instincts.
Here they are:
- Be careful with advisors. If you’re not comfortable managing your own money, be very careful to choose one who (legally) has your best interests at heart — i.e., someone with a fiduciary duty to look out for you vs. their employer. Avoid high cost planners (1% or above) as well as those that earn commissions from the products they sell.
- Buy, hold, and rebalance. Take the time to write out an investment policy statement that lays our your desired asset allocation — and then stick to it. Don’t allow yourself to follow the whims of the market.
- Keep educating yourself. History is important (and it tends to repeat itself), so read, read, read.
- Avoid hot new stocks. As the Facebook IPO recently illustrated, chasing hot new stocks is a great way to get burned. Strive to be analytical and don’t let your emotions (or the excitement of the market) rule the day.
- Admit your ignorance. I love this one. Admit to yourself that there’s an awful lot that you don’t (and probably never will) know about investing. Buy and hold investing (see above) is a great way to embrace this reality — and it can save a ton of anxiety.
All in all, I’d have to say that I agree with everything on this list. And he closed off the article with a great quote:
“We don’t expect people to fly their own airplanes or take out their kids’ appendixes, and yet we expect them to manage their retirement portfolios. In my careers I’ve done all three, and investing is by far the hardest.”
In this case, the challenge is largely related to keeping your emotions in check (and out of the way).
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math (692)
- Dish Network Customer Service SUCKS (534)
- $8,000 Homebuyer Tax Credit (429)
- Pay Off Mortgage Early or Invest? (424)
- How to Claim the First-Time Homebuyer Tax Credit (352)
- Termite Control: Sentricon vs. Termidor (325)
- How Much Should You Pay a Babysitter? (284)
- Ethanol Blended Gas = Lower Mileage? (272)
- Reduced Credit Limits? Share Your Experience (256)
- $15,000 Homebuyer Tax Credit (242)
- Buying Furniture off the Back of a Truck (227)
- Will Mac OS X Lion Kill Quicken 2007? (191)