Emotions That Drive Financial Decisions

Today’s Prep:

Are you letting emotions sway your investing decisions? We talk about what emotions should you look out for and how can you invest based on logic.

(Click the featured times below to jump forward in the episode)

Equipping Points:

What emotions are you prone to fall for when investing? How can you overcome the emotional grip? Making investment decisions based on emotions can cause your plan to not be successful. Today we’ll find out primary emotions to look out for and what to do about them.

When it comes to greed, it stops you from making intelligent and wise decisions. You might be tempted to time the market. Instead, what do you need to make your plan work? It’s good to keep some money set aside and not always chasing gains.

Fear might be whispering in your ear, especially when the market goes down. Talk to your financial advisor and keep working your plan so that you don’t let your emotions get the best of you when investing. Both fear and greed can be overwhelming.

Is pride causing you to do-it-yourself when it comes to retirement planning? You can access a lot of investing independent of an advisor. But what an advisor brings is helping you with behavior modification. They help keep your emotions in check and coordinate your plan. Don’t let guilt keep you down if you’ve been tripped up by your emotions in the past. We’ve all made mistakes and you have to get past it.

When an advisor presents a plan, they are not focused on emotions but on facts, truth, and logic. Your decisions are often based more in emotions, so having a third party to see things from an outside perspective can help you achieve your financial goals.

Listen to the entire episode or skip ahead using the timestamps below.

[1:00] – Fun Fact: Apple has enough money to buy every major sports team in the world.

[2:27] Is greed good when investing?

[3:58] – Are you investing with fear?

[5:43] – Pride may cause you to do it yourself.

[7:49] Don’t dwell on guilt.

[9:03] – Advisors are more detached from the personal emotions.

 

Today’s Takeaway:

Making emotional decisions as opposed to rational and logical decisions: you don’t want to make emotional decisions, especially with something as important as retirement.

-Eric Peterson

Related Resources:

Avoiding the Tax Time Bomb

Retirement Planning Rules of Thumb

What Creates A Sense of Urgency With Your Financial Plan?

More From Eric:

The host: Eric Peterson - Contact - Call: (515) 226-1500

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

Retirement Lifestyles

January 26, 2023

Retirement planning is so much more than simply having enough money socked away. Social activity, hobbies, skills, physical activity, and routines are all big components of your life now and likewise, should be in your retirement.

Read More

Good Intentions and Financial Advice

January 19, 2023

How can you use your money wisely? Eric answers three questions that range from short-term travel plans to long-term estate planning decisions. While it’s good to be a good steward with your money, remember what it’s really there for.

Read More

Mailbag: Should I Invest Unused Travel Funds Into Something More Practical?

January 12, 2023

How can you use your money wisely? Eric answers three questions that range from short-term travel plans to long-term estate planning decisions. While it’s good to be a good steward with your money, remember what it’s really there for.

Read More

Desire to Retire

January 5, 2023

Are you dreaming of retirement? We talk through the different levels of desire people have in regards to retirement. Some can’t wait to cross the finish line and others have no plans soon to walk away from their jobs and careers. Depending on where your desire lies, here’s what you can be doing to prepare for the future.

Read More

Retirement Lessons From Disney World

December 29, 2022

Ready to reminisce about the happiest place on earth? Or maybe you have plans to visit Mickey in the new year. On today’s show, we talk through some of the classic rides you can find at Disney World and what they have in common with your financial plan.

Read More

Naughty or Nice? Financial Advisor Behaviors

December 21, 2022

Do you think your financial advisor belongs on the naughty list or the nice list this year? Eric talks through a few scenarios that financial advisors may face to set the record straight on whether it is nice or naughty. If you come across a similar situation, hopefully, this will shed some light on reasonable expectations clients should have with their advisors.

Read More

Mailbag: Where Should I Withdraw My Retirement Funds?

December 15, 2022

In retirement, even if you’ve saved more than you’ll need, there are still a lot of questions that come up as you make wise decisions about what to do with your money. Eric answers three questions from retirees on how to best navigate what they have and how to rest easy in retirement. If ever you have a question for Eric, feel free to reach out!

Read More

Year-end Roth Conversions

December 8, 2022

As we start to close out 2022, what are the things we should be doing with our finances? Is now the time to do a Roth conversion? Depending on your situation, you may want to con-sider it before the ball drops on New Year’s Eve. Eric explains how a Roth conversion works, what the benefits are, and why you’ll want to talk to your advisor about whether you should do one right now.

Read More

Inheritance 101

December 1, 2022

An inheritance isn’t something you experience every year, so when it does happen, there are a lot of details to understand. We talk about some of the questions surrounding inheritances. Eric also shares the most common mistakes and how you can avoid them.

Read More

Mailbag: Do I Have Too Much in Cash?

November 22, 2022

When people are in retirement or closer to retirement, the accessibility of money goes up. So, what does that mean when you have to take out RMDs? How do you know if you have too much money in the bank? Talking through this with an advisor might help you make the right next steps with your money. We also talk about what mistakes people are prone to make if they try to DIY their retirement planning without a financial advisor.

Read More

Leave a Comment