Episode #30: Following The Voice Of Greed

Today’s Prep:

When it comes to your money, it might feel like you have several different voices in your head telling you what to do. Sometimes it’s greed, sometimes it’s fear, sometimes it’s wisdom. We’ll talk through the different ways greed might speak to you and if you should follow those impulses.

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

Equipping Points:

0:49 Greed says: The market is doing great, it’s time to invest more aggressively

  • Watch out for recency bias. That means you’re letting recent events heavily influence your decisions.
  • As the market goes up, we tend to put more money into the market because it seems like it will go up forever.
  • Gut feelings and emotions are surefire ways to get into trouble in the long run.
  • David shares an example of a client whose 401(k) was primarily invested in the stock market.

2:53 Greed says: Follow the advice of the guy on CNBC and fast! 

  • Is his information truly valuable? Do you think he’s giving insider tips on national TV?
  • Don’t invest solely on advice you hear on TV, or even the radio or podcasts!
  • Remember advice on these mediums is generic and not specific to your situation.

4:18 Greed says: The person next door has more saved money than you, it’s time to catch up

  • It’s dangerous to compare yourself against other people, especially when you don’t know their situation.
  • You probably haven’t spent enough time formulating a plan in order to be confident in your plan.

5:47 Greed says: Invest your emergency fund in the market

  • David shares a story about two clients who wanted to do this with funds intended for a down payment on a house.
  • When you’re saving up for something you will need in the near term, don’t worry about what it’s earning.
  • The return of your money is way more important than the return on your money.

7:11 Greed says: You’re better off without an advisor

  • If you’re really good at this and willing to consistently commit time to it, then do it yourself. Otherwise, seek help.
  • David has clients who are really smart, but they don’t want to spend their time doing this, they would rather be retired.
  • Good advice is way cheaper than a big mistake.

Today’s Takeaway:

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The host: David Dickens

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