The #1 danger to investors is alive and well.
It is pervasive. It is sometimes subtle. But it will ruin your efforts to invest and build wealth.
And in the video below, I'll show you what it is and how it may be affecting you.
And provide you a real world example.
Click below to watch:
Ever feel nervous about investing after the market has been really volatile?
Ever feel really happy when you see your account value jump up after a month?
Both of those are the Behavior Gap in action. It's our tendency as humans to feel comfortable and complacent after a stretch of good returns. And to feel horrible and stressed out after a drop.
Remember "buy low, sell high"? The behavior gap makes us want to do the opposite.
And that's why it's so damaging. It's a completely understandable response. But it's completely wrong.
When things are up a lot you should be thinking about risk MORE.
When things drop like a rock you should think about BUYING.
We can't do away with the emotions we feel. We don't want to be robots with no feelings. But we can do some simple things to close the behavior gap when investing.
#1 - Have a plan.
Either have a simple written investing plan, or hire an adviser that has one.
#2 - Only make decisions based on that plan.
Making critical decisions in the heat of the moment is bad. Have a plan, review it every once in a while and stick to it.
#3 - Save a LOT more, or spend a LOT less.
Just have more wiggle room. A larger safety net or emergency fund. If you're retired, have another income stream. Like a partially passive business.
Let me know what you think in the comments below. Have you felt the behavior gap creeping in at times? Did you act on it?
See you next time!