If I were to ask you how do you lose weight? Most often the answer would be ‘eat less and move more. Seems pretty simple ….right? All we have to do is move more and eat less. Well if it so simple why do many of us struggle with losing weight? Our logical mind tells us to move more and eat less. We know this is true and yet we cannot bring ourselves to do it consistently. Our logical mind is often over ridden by how we behave and feel.
Many if not most financial advisers do not understand the relevant academic principles connected with successful investing. To make a long story short there are three simple rules to successful investing. They are
- Own equities and the right amount of high quality short term fixed income
- Globally diversify.
- Rebalance on the highs and lows.
Again these are very simple rules that most investors fail to follow even if they are backed by data, statistics and facts. This is because they allow their instincts….perceptions….and emotions to guide their decision making. To become a successful investor we must allow the logical, cognitive part of our brain to be greater than our instincts…perceptions…emotions.
Just like people looking to lose weight, investors are subjected to outside forces to make decisions. When, to be successful they must follow the three simple rules of investing own equities and fixed income…globally diversify…rebalance.
Not unlike those of us looking to lose weight and become healthier, investors need assistance. They need the help of a coach. Someone to keep you focused on your long term goals whether it be weight loss/healthier lifestyle or long term financial goals.
An investor coach will help you build the prudent portfolio designed for you and your goals. Most investors and in most cases financial advisers do not understand the academic principles necessary to accomplish this goal.
A true investor coach will keep you informed on the things you need to know. Because to become successful in investing you do not need to know everything about investing but you do need to know the right things.
Finally your coach will keep you disciplined to your plan. Therefore to succeed with investing you must fire your broker/agent and hire an investor coach.