Knowing the Difference Between Good and Bad Ideas in Investing
Personal financial planning aims to advance good ideas and help you steer clear of bad ones. Throughout your investing life, you’re likely to make some missteps along the way. Avoiding the really big mistakes is key to making progress toward your long-term financial aspirations.
How to Make Good Choices in Investing
Listen to the Right People
When you make financial choices, you usually have many (perhaps too many) options. Everyone that you come into contact with probably has an opinion about what you should or should not do with your money.
While your friends and neighbors likely are well intentioned, their financial circumstances and goals might differ substantially from yours.Therefore, something that they believe is a good idea from their perspective may actually be a bad idea for you.
FOMO (fear of missing out) can lead you down the path to bad ideas if you’re not careful. Don’t let what others are doing with their money overly influence your decisions. Avoid letting emotions overwhelm your sensibilities about what’s right for you.
Keep a Clear Mind
Each day you make dozens of choices, some big and others that are small. These daily choices are a reflection of your habits and attention. Your priorities, values, and goals should be front and center when making choices. But are they?
The numerous distractions in modern life tend to tug and pull you from one direction to the next. Lack of attention to important financial choices can easily push you in the wrong direction. Inattention provides fertile ground for bad ideas to sprout.
Ideas of all types originate from an emotional spark. This spark moves you toward making decisions both good and bad. The information and advertisements that cross your screen each day are emotional prompts that can start you down the decision making path.
Create a Plan – and Stick to it
It’s easy to be attracted to the “shiny new” financial strategy or investment idea. But, just because something is new or different doesn’t mean it’s well suited for you and your particular goals.
With a financial planning structure to lean on, at the very least you will think more consciously about money decisions. That can be a tremendous advantage over other investors.
Good financial ideas support and align with your planning goals; bad ideas can undermine or even sabotage your long-term financial aspirations.
The difference between good and bad ideas is analogous to baseball hitters. There are players that are good at hitting singles and others that have lower batting averages but hit more home runs. Deciding which is better is conditional depending on what the team is trying to accomplish.
Your specific planning goals and stage of life are the primary conditions for your choices. If you’re seeking more stable finances (better batting average), you should make those type choices. If you want more growth (some home runs), perhaps you choose another path.
That’s the real lesson. Many ideas aren’t just innately bad, they’re just poorly suited for you and your long-term aspirations. It’s important that you stay grounded with your planning goals always front and center. Start there. Ready for a real conversation?
Disclosure
Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Investing involves risk, and while remaining invested can support long-term goals, it does not guarantee a profit or protect against losses. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.