In the 1940s, 90 percent of the stock market was owned by individual household investors. Today, with the widespread use of investment banking and mutual fund investing, individuals are responsible for trading only 20 percent of U.S. corporate equity.
Do we no longer trust ourselves with investment decisions? You might think that, with so much information now accessible via the internet, more people would invest on their own. However, the fact remains that there’s really too much information now available, much of it from unreliable sources, and very little can be tailored specifically to individual financial situations.
That’s where we come in. Our job is to help you determine a mix of investment and insurance options for your financial goals, timeline for retirement and tolerance for market risk. Together, we can take this world of information and create a financial strategy designed to help you work toward your financial goals.
Interestingly, one of the hottest areas of research in recent years is behavioral finance. This is basically the study of why we make the investment decisions we do. But regardless of the reasons, this knowledge doesn’t necessarily change our decision-making style. Our decisions are reflections of who each of us is; perhaps they reflect our values, but just as often they may reflect our dispositions (which may not always be a good thing). This is another reason having an experienced financial advisor to run ideas by can help ground decision-making and keep us focused on long-term goals.
While biases may be inherent to our nature, it’s still a fascinating field to help us understand everyday behaviors of which we may not be aware. For example, one consultant got a firsthand look at natural human behavior when she underwent two hip surgeries. Over time, she relied on two crutches, one crutch and then a cane. During this time, people were far more willing to help by holding doors and carrying things for her when she was using a crutch as opposed to a cane. It’s worth considering how this bias reflects our feelings toward people with disabilities that appear temporary versus permanent.
By the same token, we tend to make poor decisions when we’re under stress. One researcher explored this concept within the context of poverty: People living in impoverished conditions with constant financial stress tend to lack the capability, or “mental bandwidth,” to make better choices.
Perhaps understanding our bias tendencies can help us recognize why other people make what we may judge to be consistently poor decisions.
There’s been a substantial degree of unrest as the new presidential administration continues to roll out policy changes. However, the U.S. isn’t alone in that regard. In a recent survey, 63 percent of respondents worldwide said they believe their country is headed in the wrong direction.
As baby boomers wind down their careers, many would like to “phase out” of their jobs, working fewer hours each week; perhaps fewer still each year. But is this a practical solution for private employers? Maybe. When you consider a recent study on millennial worker habits, it may be surprising to find they could pick up the slack in shared workweeks.
Financial experts have long touted that buying a home is a foundation for building long-term wealth. In fact, the younger a homeowner enters the housing market, the more potential he has for greater wealth over his lifetime.
While an IRA may have a lower annual contribution limit (2017: $5,500; $6,500 age 50 or older) than a workplace-sponsored retirement plan, opening an IRA can provide an opportunity to help diversify your retirement assets. An IRA offers certain benefits that are generally not available in a 401(k), such as:
Happy early St. Patrick’s Day! 
