Rationality
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What?s worse, she resents those who are financially well off, despite the fact that many of those people worked their entire lives to save, invest, and build a nest egg.
As far as we know, there are no known cases of manna raining down from heaven in recent centuries. Isaac Newton?s observation of cause and effect is just as real in the world of investing as it is in physics. If you don?t do what is necessary to achieve your goals, you will never have the things you desire. It is that simple. The good news is, you can change course regardless of age or circumstance.
Once you and a financial advisor have put together a structured portfolio that reflects your time frame, resources, and investment goals, why should it matter if your holdings decline twenty-five percent in a year?
As long as your approach is sound and you avoid overpaying for securities, these occurrences can be valuable opportunities to add to your existing assets on the cheap.
Rationality Key 3: Be Realistic
The ability to confront cold, hard reality is perhaps one of the most valuable traits an investor can possess. Figure out what you want, what you need to do to get there, and then develop a system that will take you to your goal. A case in point: A very close friend of mine is in her mid-sixties. She has consistently made poor financial decisions yet lamented that she is unable to own a home, even now.What?s worse, she resents those who are financially well off, despite the fact that many of those people worked their entire lives to save, invest, and build a nest egg.
As far as we know, there are no known cases of manna raining down from heaven in recent centuries. Isaac Newton?s observation of cause and effect is just as real in the world of investing as it is in physics. If you don?t do what is necessary to achieve your goals, you will never have the things you desire. It is that simple. The good news is, you can change course regardless of age or circumstance.
Rationality Key 4: Don?t Be Moved By Emotion
As you were reminded in Stick to the Basics: Simple Reminders for Profitable Investing, movements in the quoted price of your investments are meaningless except in that they allow you to add to your holdings at attractive, lower valuations and sell your holdings at rich, higher valuations. As Graham said in The Intelligent Investor, to allow yourself to become perplexed by these movements is to become emotionally tormented by mistakes in other peoples? judgment!Once you and a financial advisor have put together a structured portfolio that reflects your time frame, resources, and investment goals, why should it matter if your holdings decline twenty-five percent in a year?
As long as your approach is sound and you avoid overpaying for securities, these occurrences can be valuable opportunities to add to your existing assets on the cheap.
