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Stock Market 101

Sure, the stock market is a list of corporations organized into confusing abbreviations and numbers, but it’s also an important piece of our economy’s puzzle.  Even if you’ve never traded a piece of stock in your life, you have a direct relationship with the stock market that allows you to be an important piece of the economic puzzle.  Have you filled up on gas lately?  Maybe stopped in at Starbucks for a latte and piece of coffee cake?  How about recalling the last episode of Lost, American Idol or CNN report?  All of these situations are examples of how we, as consumers, directly affect the stock market and our economy.  But how can we measure how our individual actions (like purchasing a latte) determine specific stock market repercussions?
Because everything feeds into the stock market, investors often become overwhelmed when trying to decipher all the various indicators and inputs.  Some have even attempted odd strategies in determining where business might be headed, such as counting cars in retailer parking lots and interviewing store management.  Regardless, the price of the securities themselves is what’s important to watch.  But what securities should be on your radar?

  • When it comes to the direction of equity markets on a moment-to-moment basis, a great indicator is the E-mini S&P 500 futures contract, electronically traded at the CME.
  • For those without access to real-time futures quotes, an acceptable proxy would be the S&P 500 itself, as represented by the SPDR S&P 500, which is an obligatory “must” monitor for anybody who owns stocks.
  • Keep a close eye on high-priced stocks that dominate the indices like Apple, IBM, Chevron and 3M, all which highly correlate to, and often lead, the broader market.

Equally as important as the stock market is the bond market, especially U.S. Treasurys, which can provide an immediate snapshot of the general market mood.  Due to the interconnectedness of global markets and persistent weakness in the U.S. dollar, investors are paying closer attention to currency markets, tracked easily through a number of currency ETFs.  The big players to watch in this category are McDonalds, Coca-Cola and Proctor & Gamble.   Finally, keep gold and precious metals in your sights – they may have been dormant a decade ago, but they’re the hot-money topic right now.
In addition to the stock market 101 listed above, I’ve also provided a short list of stock market lingo to help in understanding what those confusing stock brokers and newscasters are talking about.

  • Bearish: To believe the market will go down.
  • Bullish: To believe the market will go up.
  • Bottom Fishing: After a large sell-off or drop in the market, a slang term for picking oversold stocks.
  • Buy & Hold: When you buy a stock and completely forget about it indefinitely.
  • Castles in the Sky: When stock prices are extremely overvalued, and not justifiable by future increases in earnings.
  • Crash: A large sell-off (-10% or more) in the stock market in a single day.
  • Dovish: When the Federal Reserve Governors imply that interest rates may be going down soon.
  • Hawkish: When the Federal Reserve Governors imply that interest rates may be going up soon.
  • Rubber Band Effect: After a large sell-off in the market, there is a tendency for the market to bounce back right away.

2012 Retirement Planning Strategies Event

What If Everything You Thought You Knew About Investing Was Wrong?
Tuesday February 28th and Thursday March 1st.  Please hurry, limited seats available for this highly sought after event.  Separating Myths from Truth: The Story of Investing Come visit with us for this educational event.If you are married, your spouse must attend. Please call 330.836.7800 and let us know you will be attending, we would love to have you.
Somewhere deep in your gut, you know you’ve been misled about your investments and retirement savings. The folks on Wall Street and those connected to the securities industry in general are making big profits by hiding the truth from you. Add to that the insidious alliance between Wall Street and the media and it’s no wonder you’re frustrated about your portfolio.
If you are one of the many Americans that are looking for answers about how the securities industry works, then this powerful, insightful event is a must attend. We will show you and your guests little known secrets about investing that these huge companies want to keep hidden from you.
Join us to learn:
•    Does Market Timing Really Work?

•    Can Anyone Really Pick the Best Stocks in Advance?

•    Does Your Funds Track Record Performance Really Help You Predict the Future Returns?

•    How much are You Really Paying for Professional Advice that You May Not Know About?

•    PLUS: The “big secret” of what’s killing the return in your portfolio?

Insider Secrets to a Happy Retirement

According to research by the Center for Retirement Research at Boston College, only 60% of current retirees say that their retirement is “very satisfying.”  The study also found that nearly one in five retirees say they are experiencing lower levels of overall well-being in retirement than they were before they retired.  So what’s causing these high levels of unhappiness in what’s supposed to be the golden years of your life?  The study found four major reasons for discontent among retirees with yep, you guessed it, money being number one.  Let’s take a look at the suggestions the study offers for what does – and doesn’t – please retirees.

  • Money.  Can money really buy you happiness?  Well, apparently in your retirement years it certainly can.  Your financial position — at least relative to other people your age — matters to your contentedness in retirement; retirees who said that their financial situation was better than most other people they knew were also happier.
  • Concern for others and the planet.  The study found that people who reported high levels of concern for the welfare of others and for the earth tended to be happier in retirement.  What were interesting about the findings of the study was those people who have what the researchers call “outward orientation” — they successfully engage with the world though friendships and activities — were much happier than those who had an “inward orientation” and thus were more isolated.
  • Health.  Not surprisingly, the number and severity of illnesses and disabilities you experience in retirement predicts happiness.  The study found that those who suffered from chronic, severe illnesses like cancer or multiple sclerosis tended to be less happy than those who were in better health.
  • Traditions.  Upholding traditions can raise a retiree’s happiness.  Not only do traditions such as holiday gatherings and regular family get-togethers help retirees stay content, but the study also found that conforming to social norms can have a factor on retiree’s happiness levels as well.  People with high levels of “enhancement,” which means they care a lot about status, power and what others thought of them, were less happy than those who had lower levels of “enhancement.”

With all the articles I’ve read about planning for retirement it’s refreshing to think less about financial planning and more about emotional planning.  While money still remains the retiree’s main concern, it’s important to look at other factors that determine a person’s happiness.  What’s interesting about these findings is that the three factors listed after money (concern for others and the earth, health and traditions) can be actively practiced through community and family engagement, as well as a healthy lifestyle.  Money, on the other hand, should be managed much more closely and by a professional to ensure successful retirement.

Solutions to Your Biggest Money Problems

No two individuals have the same financial woes.  Not only do financial situations vary in income, debt, spending and saving habits, but they also vary in the perspectives of those individuals and how they rank their specific money problems.  After researching a few polls on the most popular money problems, we’ve created a list of what financial issues most individuals worry about the most and what you can do about it.
I spend too much.  Without a doubt, the most worrisome financial problem people dwell over is the act of spending too much money, but why?  While credit cards play a big factor in their ease and accessibility of use, scientists have actually proven that spending money makes us happy.  Surprise?  Probably not.  Much like chocolate cake or kissing a loved one, the idea of spending money can release a feel-good chemical in our brains called dopamine.  Overspending can also stem from poor planning or lack of time.  So, how do you stop spending?  It’s not easy but doing things like changing your daily habits, only having one credit card and using more cash, unsubscribing from catalogs and finding other inexpensive ways to be happy will help you curb your spending problems.
I save too little.  You’re not alone!  According to the U.S. Department of Commerce, the average American household saves 0.4 percent of its disposable income, down from 2.4 percent in 1999. Some blame low interest rates; if you’re making very little in your savings account you have less incentive save.  Others blame spending too much.  It’s obvious – when you spend too much you can’t save what you should.  One nice way to make yourself save is to detail out a clear goal.  Additionally, you can set up automatic deductions from your paycheck, open a 401(k), and start an immediate savings account.
Gas prices are absurd.  Energy prices, in general, are on the rise, but gas prices specifically are up one-third in the past year.  And with our economy depending heavily on other world markets, it is clear that gas prices are not going to drop any time soon.  There are several alternatives to driving, like taking metro transit, walking, biking and carpooling.  But if you must drive, check out the cheapest gas prices online, remove heavy junk from your car, and be sure to check the oil, air filter and tire pressure on a regular basis.  If you can, investing in energy efficient will save you money in the long run.
I’m not sure how much to save for retirement.  The standard number for your retirement planning is 15% of your income each year.  However, each person’s financial picture is different, and there are many variables that need to be factored in.  You can either contact a retirement specialist, or check out the countless online calculators that will do the math for you.  Some tips for retirement planning include 401(k)’s, IRA’s, pension plans, investments and annuities.
I need a budget.  Are you constantly finding yourself out of cash?  Is your monthly cash cycle consistently inconsistent?  A budget is simply a plan on how to appropriately spend your money.  In order for it to work, though, you must realistic and stick to your plan.  Budgets are relatively easy to calculate.  Simply sit down and create a map of your monthly spending and saving habits.  Follow it accordingly and revisit it at the end of the month to determine what’s worked and what hasn’t.  Another tip is to sign up for an online money-tracking program.  You can even link your bank accounts and bills for deductions itemizations.
I need a financial plan.  Wait, didn’t we just talk about budgets?  A financial plan is much broader than a budget.  It’s a track to help you achieve those big things in life, like a house, vacation home or your child’s education.  It encompasses your savings, investments and even your insurance.  Creating a financial plan is much more complex than creating a budget.  Do some research and hire a financial planner.  The peace of mind in knowing your financial future is secure and protected is worth the time and effort in hiring and educator to coach you through your big life decisions.

How to Save More than $100,000 Each Year

No, I’m not talking about a brand new investment strategy or hot stock in the market right now, I’m talking about all those supposed “small purchases” we make each and every single day.  Have you ever asked yourself at the end of the day, “What did I buy today?”  Doubtful.  And if you did, you’d probably realize how much money you’re actually spending on the small, in most cases unnecessary or reducible purchases you make each day.  Well, no worries, we’ve decided to do the work for you.  You’ll be more than surprised to learn that you could be saving over $100,000 each year if you reduced the amount of small purchases you make.

With the help of Encore and the President of Orr Financial Group, we’ve figured out how much these “little things” are costing us.  Assuming that we buy these items five days per week for 40 weeks a year (or 200 out of 365 days per year), and we do  this over a 35-year career, we came up with the following calculations.  (What’s even crazier is that these prices don’t reflect inflation, meaning these impulse buys will most likely cost even more going into the future).

  • Latte ($3.95 each) = $27,650
  • Energy drink ($3.99 each) = $27,930
  • Muffin ($3 each) = $21,000
  • Lunch ($8 each) = $56,000
  • TOTAL: $132,580

With the implications that in order to solve this problem you’d reduce the amount of impulse buying and start consolidating your purchases, you’d be saving more than $100,000 each year.  But what if you took that money and invested it?  If you put your savings into a 401(k) or Roth IRA each year for the next 35 years (assuming a mere 3% annual rate of return), you’d end up with an extra $246,560.  If you assume an 11.5% annual rate of return, which is roughly what the S&P 500 yielded from 1970 to the present, you’d end up with more than $1.7 million in your retirement account, the report says.

With the understanding that this report goes to the extremes, it’s still important to understand the principle of the findings: many individuals throw away their money on unnecessary purchases – impulse buys that really add up.  What’s more, if the money that’s thrown away on these purchases was allocated towards an investment or savings account, it has the potential to grow exponentially over many years and provide an excellent retirement account for your future.  Regardless if you think this report pertains to you or not, it’s still important to monitor your spending.  Try writing down every single purchase made in a month, and at the end of that month, go back and review your findings, you may find yourself pretty surprised in the end.

Cause & Effect: Household Numbers on the Rise

It may not be what you think – according to the Census Bureau, the number of individuals and families living together have taken a big jump in the past several years – and it’s not because grandma and grandpa are living with their grandkids.  The report found that 69.2 million, or 30% of families were “doubled-up” (households that include at least one person 18 or older who isn’t enrolled in school and isn’t the householder, spouse or cohabiting partner of the householder) in 2011, up from 61.7 million adults, or 27.7%, in 2007.  The surprising part?  The biggest increase comes from young people, ages 25-34, living with their parents.  Some 5.9 million, or 14.2% of 25-to-34 year olds, lived with their parents in 2011, up from 4.7 million before the recession.

The Cause:  With high unemployment rates, a meek economy and a surplus of students graduating from college with a laundry list of student loans to pay off, it’s not surprising that more and more young adults are living or moving back in with their parents.  What better way to save some money, look for a job and improve their financial standing?  Another interesting cause I read the other day was that unlike the past, many young adults find it quite pleasant to live with their parents these days.  With child-rearing strategies changing, more parents and their children are nurturing lasting relationships together.

The Effect:  The Census Bureau is having a tough time in figuring out the actual poverty rate of the United States: “These young adults who lived with their parents had an official poverty rate of only 8.4%, since the income of their entire family is compared with the poverty threshold,” David Johnson chief of the Housing and Household Economic Statistics Division at the U.S. Census Bureau said. “If their poverty status were determined by their own income, 45.3% would have had income falling below the poverty threshold for a single person under age 65.”

Another effect that affects the economy is a smaller number of households.  A reduced number of overall households leads to a reduction of consumers, including those in the housing market, which puts a huge drag on the economy.  Regardless of the misleading statistics, the biggest impact can be felt much closer to home.  While young adults living with their folks may be reaping the benefits, parents supporting adult children have less money to spend on themselves, not to mention less income to save for retirement.
Some experts say that there is a silver lining.  They believe that these young adults “doubling up” will eventually become financially stable and be able to move out, enter the housing market and start consuming again.  This boost in consumption would lead to an improvement in the broader economy.

Unfortunately, there’s no telling when that will happen, and in the meantime it’s not fair to many retirement-saving parents to allow their children to hurt their futures.  If you’re going to provide a home and various necessities for your post-graduates or financially-unstable children, make sure you set parameters that keep them from getting to comfortable in your house.  Don’t feel bad charging them some sort of rental fee and giving them a timeline in which they must move out or find a job.  Without structure the situation could get worse and put too much pressure on your financial future.

3 Simple Steps to Create a Seriously Savvy Budget

No, budgets are not attractive, fun or exciting in any way shape or form.  They are, however, the necessary evil that can assist in getting you and your family’s spending and saving habits back on track.  It’s difficult to understand why more individuals don’t already adhere to a budget, what with the economic crisis and unemployment still looming above us.  It would seem that the majority of individuals without a budget either don’t think they need one, are unaware of its benefits, or simply don’t like discussing or even thinking about their financial situation.  The unfortunate part about that last point is the fact that implementing a personal or family budget can help dig those individuals out of the financial holes they’ve already put themselves in.  And the best part?  It’s ridiculously easy to do.  From writing everything down on your own to downloading or purchasing budget software, technology has made it extremely simple to execute.

The first step in creating a budget (and all these tips go for individuals to families alike) is gathering every financial statement you can find.  Examples include bank statements, credit card statements, investment accounts, utility bills, and income information.  The idea is to gather any piece of information regarding an expense or income for you or your family in order to process the information into a monthly average.  Record all your sources of income – any type of cash flow that’s coming to you needs to be recorded.  Next, create a list of monthly expenses.  Examples include the mortgage payment, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, auto insurance, retirement or college savings – essentially everything you spend money on (even that daily latte from Starbucks!).

After you’ve created your list of expenses, you’ll want to break it up into two different categories – fixed and variable.  Fixed expenses are those that stay relatively the same each month and are essential parts of your way of living.  Examples of fixed expenses include your mortgage or rent, car payments, cable and/or internet service, trash pickup, credit card payments and so on.  For the most part, these expenses are essential yet not likely to change in the budget.  Variable expenses are those that will change from month to month and include items such as groceries, gasoline, entertainment, eating out and gifts, for example.  This category will be important when making adjustments.

The last steps include totaling both lists of expenses and income.  This is where you’ll need to make adjustments and determine what types of changes you’ll want to make to your spending and saving.  If your end result shows that your income outweighs your expenses, you can start prioritizing the excess to areas of your budget such as retirement savings or paying more on credit cards to eliminate that debt faster.  If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut.  Since these expenses are typically adjustable, it should be easy to shave a few dollars in a few areas to bring you closer to your income.  Once you’ve made your adjustments and have a reasonable budget to stick to, make sure you review it regularly to determine whether you are staying on track and all your numbers are up-to-date.

In addition to the steps I’ve mapped out, I’ve also put together a list of snapshot tips to help you in your budget creation and execution:

  • Be honest!
  • Track your spending to make sure it stays within your guidelines.
  • Use software to save grief – personal finance programs have built-in budget-making tools that can create your budget for you.
  • Don’t drive yourself crazy, or stop buying groceries!  Monitoring your spending can sometimes lead to overly-attentive detail – don’t go overboard.
  • Monitor your cash flow – it’s much more difficult to track where your cash is going, so keep those ATM receipts and watch your cash flow with more scrutiny.
  • Beware of expenses that may seem fixed – do you really need that $50 bottle of wine?
  • Aim to save at least 10% of your income for your future, such as investments and retirement planning.

Budgets aren’t easy to create, let alone stick to, but they are essential in getting a grip on your financial situation.  Looking over this list of tips, I’m sure you’re thinking, “okay, easy enough.”  But it’s not.  It takes time, effort and active dedication to continually be aware of your saving and spending habits.  The best part?  You won’t regret it; it is guaranteed to pay off in the end. Think of your personal budget like your map and journey to financial peace of mind.

Financial Advice VS Financial Coaching: Which One is Right for YOU?

You’ve heard the different terms describing financial planners and what they can do to secure your financial future.  The question is: did you know that there is a vast difference between a financial advisor and a financial coach?  From a bare-bone, definition standpoint, a financial advisor is “a professional who renders financial services to individuals,” whereas coaching is “a future-focused practice with the aim of helping clients determine and achieve personal goals.”  In other words, a financial advisor lends his hand in managing the wealth that you’ve already built; a financial coach helps you build that wealth from the get-go.  Would you rather go to a greenhouse and buy a plant?  Or go to a greenhouse, buy the seeds, learn how to nurture them and watch them grow?  Financial coaching gives you the tools and knowledge necessary to take those seeds home with you, plant them, and cultivate a bountiful garden.

First and foremost, it is important to point out that each and every individual is different – different goals, different savings plans, and different incomes.  Maybe you already have an impressive garden, and are looking for financial advice on investments and portfolio options.  Financial advisors manage the money you already have – you give them complete control of your assets and they do all the work.  While this model works great for some people, it’s not ideal for others.  Wealth coaching focuses on YOU.  It makes you a major actor in your financial building process.  Wealth coaches are educators and mentors that give you the unique tools and strategies necessary for financial freedom.  Why put your financial future in the hands of someone else when you could learn and build your financial path through a dynamic relationship where the goal is your financial success?  Here’s a breakdown of the major differences between financial advice and financial coaching:

Financial Coaching

Financial Advice

Follow the client’s agendaFollow the advisor’s agenda
Unique strategies, plans & portfoliosSimilar plans, strategies & portfolios
Client becomes expert & authorityAdvisor is authority
Dynamic relationship creates independenceRelationship creates dependence
Client is accountable and responsibleAdvisor is accountable and responsible
Posting questions and educatingDirecting
Focuses on learning and growth of clientFocuses on financial product and sales
Goal is to create a fully functional, educated, independent clientGoal is to create a portfolio for a dependent client
Teaches self-responsibilityAdvisor takes on responsibility
Paid for eliciting, educating, expanding, and supporting client’s whole financial successPaid for portfolio advice and transactions
Draws out client’s values, skills, and knowledgeImposes advisor’s values, skills, and knowledge on client

As you can see, there are pros and cons to each financial planning business model.  It all depends on where you are in your financial planning process.  The benefits of having a financial coach in your corner are endless: take control of your finances and learn how to harvest a secure and protected financial garden.  Or, buy the plants and enlist the help and advice of a certified gardener to be the expert and authority in your financial future.  Heck, do both!  Enlist the help of a financial planner to both coach and advise you in your financial decisions.  Regardless of your financial situation and where you are in your financial planning process, it is crucial to understand the importance of a second pair of educated eyes looking at your fiscal circumstances.

How to Stop Paying the Bank

In this tight economy, even the smallest of unnecessary fees can be a burden to our strapped finances.  One of the best ways to not only curb unnecessary fees, but also manage our finances more successfully, is to supervise our banking operations more closely.  I mean, it’s our money, right?  You wouldn’t willingly hand your wallet or purse over to a stranger to monitor, would you?  Many individuals don’t keep a close watch on their bank and its operations because they’re unaware of their ability to control their accounts and make important decisions.  One of the biggest problems that bank customers face is the issue of overdraft fees.  According to a study by the Durham, N.C.-based Center for Responsible Lending, banks and credit unions collected nearly $24 billion in overdraft fees in 2008 – 35% more than two years earlier.  Below is a breakdown of how to put the consumer back in control and armed with the right knowledge to manage their finances successfully.

  1. Know your bank’s policies.  No, I’m talking about the seemingly endless, too-small to read fine print that most people can’t understand.  Regardless of whether you’re signing for a new account, or have been a veteran customer for over ten years, it’s up to you to find out the right information.  Do some investigative work and find out what’s most important to you.  Pick up the phone or even head to your local branch and start asking questions.
  2. Opt out of overdraft protection.  Many individuals don’t even know that they have overdraft protection, because some banks will enroll customers into the program without their approval.  The problem with overdraft protection?  The fees that come with it.  If you are enrolled in overdraft protection and your account goes negative, your bank will tack on hefty fees, daily, to cover for the charge.  No overdraft protection?  No overdraft fees.  However, your bank obviously won’t front the money for the charge you are attempting to make.  Some banks have programs that carry lines of credit for overdraft protection, and while the interest you would pay is less than the fees tacked on by the bank, it’s better to simply manage your bank accounts and maintain a minimum balance than pay the bank extra money.
  3. Enlist technology.  Instead of saying balance your checkbook (do those even exist anymore?), it’s more appropriate to say balance your technologies.  In this day and technologically-savvy age, more consumers are using online technologies to manage their money and finances.  Many banks will allow their customers to arrange for an alert to be sent to them by text message or e-mail if their balance falls below a certain amount, and when a payment date is coming up.
  4. Carry backup cards.  Of course credit cards come in handy when it comes to a lack of cash situation, but they are not the answer when it comes to managing your finances successfully.  While keeping an extra one or two credit cards on hand can help prevent running out of payment options if some sort of fraud-related hold strikes your account, prepaid cards are a better answer when it comes to avoiding interest rates, overdraft fees, and late payment penalties.
  5. Plead your case.  As I pointed out in the “know your bank’s policy” section, it is important to stay in contact with your bank and communicate with them when it comes to policies and fees.  If you slipped below your account balance or have an ATM fee that’s unreasonable, don’t hesitate to call your bank manager and plead your case.  Especially if you are a good customer and this is an uncommon occurrence, your bank should side with you and waive the fees.  Institutions trying to keep their customers should have discretion with these issues, in hopes of keeping their customers.  If they’re not sympathetic, take your business elsewhere.

The two main points to take away from this is knowing that as the consumer you hold the power.  It’s your money, and you should have control in its management and decisions.  Secondly, you must understand that it takes initiative to understand the banking process, but that it’s well worth the time and effort it takes to comprehend how your money is being taken care of.  Avoid giving your purse or wallet to a stranger, and stop paying your bank excessive and unnecessary fees – $40 coffees just aren’t worth it.

Do You Make These Investment Mistakes?

Have you ever found yourself watching MarketWatch, CNBC or CNN and felt the need to immediately make an investment decision based on emotional or personality-driven thoughts or characteristics?  You’re not alone.  According to a recent global survey by Barclays Wealth, a large percentage of wealthy investors not only realize their tendency to make decisions based on emotions but would welcome help in dealing with the problem.  One of the keys to success is recognizing that a problem exists and devising mechanisms to control or limit bad decisions.  The report, “Risk and Rules: The Role of Control in Financial Decision Making,” listed the “Failures of Rationality,” which were found in four types of investment decisions:

  1. Failing to see the big picture.  Instead of making decisions while keeping the entire portfolio in mind, investors will end up investing too much in a single asset class, industry, or geographic market.
  2. Using a short-term decision horizon.  When investors focus on short-term returns instead of long-term wealth accumulation, their willingness to take short-term risks is too low and they often make the wrong investment decisions.
  3. Buying high and selling low.  Investors that do what’s comfortable for them during bullish or bearish market conditions tend to buy when markets are high and sell when markets are low, which is a risky strategy that fails to take advantage of market opportunities.
  4. Trading too frequently.  When investors’ emotional and personality traits take hold, they tend to take an irrational favoritism towards action, which can lead to an increase in investment costs and other poor decisions.

What else did the Barclays survey find?  There is substantial improvement in investment decisions as people get older.  Older investors were much less likely to trade too often, try to time the market or base investments on short-term considerations.  They were also more satisfied with their financial situation.  The survey also found that women are better long-term investors than men, who tend to take more risks and are more likely to favor frequent trading and efforts to time the market.  Because women have a higher desire to use self-control strategies (which they are also more likely to believe are effective), women tend to trade less and earn higher returns over time.
The report identified seven self-control strategies to help people counter their tendencies to make bad financial decisions:

  1. Limit the options. Purchase illiquid investments to avoid the urge to sell investments when the market is falling.
  2. Avoidance. Avoid information about how the market or portfolio is performing in order to stick to a long-term investment strategy.
  3. Rules. Establish and use rules to help make better financial decisions, such as spend only out of income and never out of capital.
  4. Deadlines. Set financial deadlines. For example, aim to save a certain amount of money by the end of the year.
  5. Cool off. Wait a few days after making a big financial decision before executing it.
  6. Delegation. Delegate financial decisions to others, such as allowing an investment adviser to manage your portfolio.
  7. Other people. Use other people to help reach financial goals. An example would be meeting with a financial adviser to make and execute a financial plan.

Even if these popular investment mistakes don’t apply to you, they still make a good point in the fact that making financial decisions shouldn’t be based on emotional or personality-driven thoughts or characteristics.  Having a rational investment strategy in place is crucial in making the right financial decisions.  You wouldn’t make a decision about buying a house or having surgery without thinking it over and going to the experts for advice, would you?  Your investment decisions and financial management choices not only determine your future, but the future of others as well.  Take advantage of the Barclays Wealth’s survey’s self-control strategies and get a solid grip on your investment decisions.