What Does It Take To Be Successful In Investing Well?

The number one reason people sit down with our team is they need investment advice. But the coaching that you receive along the way and keeps you on track long-term is just as important.

Today we're going to dissect the subject of behavioral economics and how making financial decisions with your gut isn't doing you any favors. 

The Head and The Heart - Two Kings of Decision Making

I have what you could call an unrequited bromance with Jason Zweig, a writer for the Wall Street Journal. I haven’t always agreed with his opinions, but I have a deep admiration for him and I generally think his commentary is spot on.

Last week he wrote “Dear Investor, That Cocky Voice in Your Head Is Wrong”, an article about the idea of behavioral economics, a topic we visited on a previous show. The idea behind behavioral economics is that humans are far from logical robotic beings, despite that fact that some of us pride ourselves on the logical distinction.

Some of us lead with our hearts. Some of us lead with our heads. We don’t always make decisions based on logic. Many of my clients, even those with the most analytical minds, maintain they make decisions rooted in logic. From where I sit, most of us make decisions based on feeling rather than logic.

Behavioral economics says the same rings true for how we spend and invest our money— it’s based on feelings.

Zweig shines a light on the bad habits and mistakes that we have learned from behavioral economics.

I meet with clients all the time who have money stashed in different accounts they’ve accumulated over the years and their account management strategy (or lack thereof) has been based on what feels right.

I want to get practical and offer guidance to how you can avoid the common pitfalls and traps of behavioral economics and set yourself up for long-term success.

Allow me to offer a personal analogy: Food

Food is my vice. It’s what I turn to in times of joy and in times of sadness. Sticking to a healthy eating plan is a chore for me. Exercising, even though I know have to do it, its permanent incorporation into my daily routine has been a struggle.


The two aspects you need for successful investing:

1. I understand I have an intelligent design. I know I have free will and intelligence in this world. I have a personal trainer that teaches me and my kids about exercise and eating the right foods.

But if all I have is that knowledge, does that stop me from getting a milkshake at Chick-fil-A? Most definitely not. I know that resigning to my Chick-fil-A milkshake craving isn’t the smartest idea for my health.

Even while idling in the drive-thru, I can explain to you all of the reasons why I shouldn’t indulge, but that doesn’t stop me from driving to the window and picking up my delicious milkshake.

We have to have knowledge but we have to know that knowledge isn't enough.

When applied to your investing knowledge, one issue some people contend with is that you lack the knowledge and list off all the excuses for yourself.

2. You’ve got to have coaching for success. The physical trainer I work with educates me, but he also checks in weekly to ask how it’s going and if I’m correctly applying the things he teaches me. Even though I have the knowledge, the coaching gives me the follow through. I also work with a business coach and I regularly ask friends to hold me accountable. Because if it’s just me, the knowledge isn’t going to be enough.

It’s the combination of knowledge with coaching and accountability for success. That’s what gives us real and tangible change and pushes us across the finish line.

Behavioral economics tells that we’re overconfident and tend to believe that we’re smarter than we are.

Here's what we desire for your future 

Do you have an investing strategy that’s built on facts, historical trends and research? If not, you might need a more intelligent design for your investments. That’s what we do. We inject knowledge, investing theories and a healthy dose of accountability based on your financial goals.

Either you don’t know why you’re invested in one account or the other. Maybe you don’t have a firm grasp on the future or anyone coaching (and steering you away from the Chick-fil-A drive-thru) you toward your dreams and true success in the future.

We can change that!