After more than 38 years helping clients achieve financial independence, Kevin Greig has learned a great deal about how investors think, feel, and behave when it comes to their finances.
Kevin has concluded that experienced investors care more about achieving their long-term goals than comparing investment returns against standard benchmarks, outperforming the market, or outdoing their peers!
However, too many inexperienced investors measure financial performance using improper matrices. While comparing investment performance against pre-determined benchmarks (e.g. S&P 500 index) is useful, most investors should be much more focused on achieving their goals (e.g. becoming financially independent, being able to take early retirement, paying for their child's college education, etc.). Employing sound financial planning principles and defining reasonable goals and expectations is the key to success.
Unfortunately, less experienced investors don't ask the important questions, such as:
Kevin has concluded that experienced investors care more about achieving their long-term goals than comparing investment returns against standard benchmarks, outperforming the market, or outdoing their peers!
However, too many inexperienced investors measure financial performance using improper matrices. While comparing investment performance against pre-determined benchmarks (e.g. S&P 500 index) is useful, most investors should be much more focused on achieving their goals (e.g. becoming financially independent, being able to take early retirement, paying for their child's college education, etc.). Employing sound financial planning principles and defining reasonable goals and expectations is the key to success.
Unfortunately, less experienced investors don't ask the important questions, such as:
- Are my financial goals well defined and attainable?
- Am I content if I underperform the stock market in a given year as long as I am making reasonable progress toward achieving my financial goals?
- Am I willing to accept a target rate of return necessary to achieve my goals that is independent of the stock market returns?
- Am I willing to share my financial expectations, needs, and fears with my financial advisors?
- Am I willing to accept that "true risk" isn't market volatility, loss of money, or other objective measurable statistics; rather "true risk" is not achieving my financial goals?
- Do I modify my behavior when the stock market goes down differently than when the stock market goes up?
Something to think about. For more information, contact Kevin Greig.
Kevin P. Greig, CPA -- 3345 Rosemont Way -- Eugene, OR 97401 -- 541.915.4636 -- [email protected]
