Emotions play a powerful role in life’s important decisions. You want to listen to your gut and go with what feels right. Emotions can be helpful in discovering what you want and need. On the other hand, emotions can sometimes take over and lead to negative outcomes. I believe the most powerful emotion is regret. Regret can linger and extreme cases, it gets worse over time. You’ll want to do everything you can to avoid regret.
Nobody said it would be easy
When it comes to financial decisions, none of us has a crystal ball. It’s not always easy to make a decision regarding your investments and know it is the right decision. I suggest doing what makes the most amount of sense relative to your goals, risk tolerance, needs, etc. If you make decisions based on what someone else is doing, you may have regret down the road. Everyone should decide how and where there money is invested for their own unique circumstances. There is no “one size fits all” investment strategy. Potential regret can come from trying to imitate what a high profile person is doing with their money for the same reason. Remember, there’s no magic to how to make money. People do what’s best for them and you should, too.
No such thing as a stupid question
How do you avoid regret? Hold yourself accountable. Think things through, getting a second opinion if need be and ask questions. Sometimes, you just have to say no. Often times, a financial services professional can help you be smart with your money. They can help you avoid rushing into buying the new, hot investment and/or can help you avoid selling low and buying high. The average investor over the years has significantly underperformed most major market indices because they’ve made changes and decisions based on emotions. It’s tough to know when you should get in or out of a certain investment. You should devote time to such important decisions. Don’t decide to make a big change after watching the news or reading an article. If something isn’t clear about your finances or a proposed investment, ask questions. If a financial representative shows signs of being bothered by your questions, you’ll know you want to quickly head for the exit. Always remember: It’s your money; so it’s your decision! You’re not looking to make friends. You’re looking to make money. Whether you work with a professional or not, avoid regret by having a good strategy and sticking to it.
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Think and Plan First
Regret can also be caused by jumping into the wrong investments and then asking questions later. Unfortunately, some people don’t get the clear facts at the start and then it’s too late. Recent and soon-to-be retirees should heed this advice the most. A company retirement plan is usually a person’s biggest asset. Most of the time when people retire or leave a company, they roll their money into an IRA. You do not want to move money to the wrong place. There is a lot happening when you separate from an employer and you must handle your nest egg with care. Don’t just hand you money over to the first thing pitched to you unless you are completely comfortable. Ask questions, get comfortable, and then make your investment decisions.
Who can you trust?
Finally, you can avoid regret by having people involved who know and care about you. If you work with a trusted financial services professional, that person is someone you hopefully can always count on for unbiased support throughout your retirement years. It may also be helpful to have a family member or close friend involved for an extra set of ears and eyes to make sure you’re not setting yourself up for future regret. With support, you are likely to make the best decisions for yourself and avoid regret.
