Self-sabotage is a common thing. Whether you’re a highly qualified shrink, or more of the garden variety human narrator, you’ll recognize the pattern of someone who is onto a good thing and still managed to make it all go awry.
They’re not necessarily doing it consciously, and I’m sure they’d rather things didn’t go so pear shaped. If you fall into that category (and let’s admit, at one point or another, most of us do), you’ll probably find that your financial security is being hampered.
So, how does self-sabatage damage your investment? And how can you recognize the signs and (hopefully) start addressing the problem. If you can stop the sabotage, your investments and financial future will flourish.
Forbes, as always has come to the rescue, and inspired the following list.
Trading it all away
I have a short attention span too, but let it enter your investment activities and your finances will suffer. Research shows that unmarried men are overconfident, and potentially a little bit bored, and are therefore 67% more likely to trade than unmarried women. This leads to unmarried women performing better than unmarried men by 1.4 percentage points a year.
Running it up
Taxes. Poor market timing. Commissions. They’ll all drain the life out of your investments if not viewed with a wary eye and treated with a bit of caution.
Playing with the big boys
Acording to Odean, an expert who recently wrote a paper on this very issue, investors tend to be pretty cocky and think that they can go up against Goldman Sachs or JPMorgan Chase. Imagine a football match. You are the goalie, and the other team’s strikers are Maradona, Pele and Zidane and they’re all running towards you. That’s how it’s going to feel.
Distracted by bright lights
It’s tempting to buy into Apple and Google, but in reality, maybe you should have thought about that ten years ago. Not all good stock options get that amount of press. Don’t buy into the Next Big Thing trash talk, but do some research and find yourself a stock option that performs. It doesn’t necessarily have to be a red carpet wannabe to do so.
Mis-time the pitch
Buying a stock option the day after it ranks as a top performer is a badly timed investment. At that point, there’s only one direction it’s likely to go, and that ain’t up.
Use that crystal ball
Odean found that, generally, the stocks people sell tend to outperform the ones they then buy. Don’t fall into the trap. Stick with your stocks, and listen to the advice of experts. Don’t get trigger happy.
That said, if you’ve bought a bad stock, cut your losses and admit the faux pas. Don’t hold onto them as if a lifeline. Talk about your options with an expert and cut the baggage free.
It’s all too easy
Investors who switched from telephone banking to online banking went from beating the market by 2% annually to lagging behind it by 3%. I find that an amazing fact, but it makes sense. Of course, everything online is easier, quicker, less cumbersome which is potentially exactly what you don’t want when investing.
Consideration, rationality and a bit of time are all good things when it comes to your money.