3 Important Truths About Investing

As we face increased uncertainty about our lives, work and the markets, it can be easy to become anxious and fearful. And while some worry is good for us, too much of it can lead to impulsive decisions and negative health effects, like dizziness, insomnia, headaches and fatigue.

The best way to combat those feelings of fear and anxiety is to focus on important truths that are constant in our lives, regardless of what goes on around us. Asking yourself: “What is most important to me?”

Today, we’re sharing three important truths with respect to investing. There’s a lot we don’t know, but there are several constant truths about finances. And if we focus on those truths, we can be in a better position to make thoughtful and wise financial decisions.

3 Important Truths About Investing

If we were to break down financial planning to just the basics, these three things definitely be there at the core. Read on to gain knowledge about the financial industry and calm your investing anxiety.

 1. The Media Usually Sensationalizes the News

Media companies need an audience to make money. Urgent, breaking news is eye-catching and gets us emotional, so those kind of stories are often on the front page.

Given this fact, we have to ask ourselves why we even tune in? Yes, it’s good to be informed – but not when the information is skewed and may influence us to make unwise decisions. When you’re watching or reading the news, it’s best to keep your critical lens on and question everything – especially the most sensational stories.

 2. Investor Behavior is More Important Than Investment Knowledge

How you behave and respond to news and market movements have a much greater impact on your wealth than market knowledge. You can read every book on investing and retirement planning out there, but it’s the pieces of advice you choose to act on that truly make up your portfolio.

Spend more time thinking about your actions and reactions to market events. After all, it is your financial decisions that directly impact your wealth.

 3. Investor Behavior is Somewhat Predictable

Because thinking and responding are largely habitual practices, investor behavior is quite consistent. Voltaire said, “History never repeats itself, but man always does.”

As emotional beings, we overshoot both on the upside and the downside. Our moods and limited views drive most of our decisions – which is why investors often make the wrong decision at the wrong time. Individual investors can improve their investment behavior by learning correct perceptions and following a set of investment rules.

Our goal as advisors is to be a constant reminder of those things we need to pay attention to, and those things we need to ignore. There is so much noise out there, and the anxiety and fear that is permeating our lives is very real. But it need not affect you. Let’s talk about what truths, both personal and financial, you can focus on to get you through this most difficult time. We are here for you.

Learn More with Clarity

Our advisors can help you better understand your relationship with money – and create a plan for the future. Click here to schedule a consultation with Clarity Wealth today.

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