You Know This Person—the Average Investor with Self-Inflicted Wounds (Part 1 of 4)

May 19 2008

Published by at 1:34 pm under Investments

Part 1 — The Average Investor
He is fixated on his Thrift Savings Plan (TSP) or on-line investment account. Always looking for the better money making purchase…the fund with the highest return…a fund noted in a money magazine…the hot new fund his bud mentioned to him. Have you met the lady who is constantly looking to dump her underperforming funds or stays parked in the most conservative funds to play it safe?

These are the average investors with the self-inflicted wounds. These people are wiping out their investment returns. It’s time to just say “No!” to self-inflicted investing wounds.

You have one career-lifetime to earn and save enough so that one day you can buy your freedom from the workaday world. You know the future where you do what you want, when you want, how you want. You can’t afford to foul-up your one chance to get your savings plan right.

Every time you make the wrong move, your financial plans and your future life suffers a setback. Just ask all those investors who took a beating after the Dot-Com bubble burst in March 2000 if they wished they had been more disciplined investors.

Setbacks cause you to:

  1. Save more,
  2. Work longer, or
  3. Eat cat food in retirement to make up for your mistakes.

 

Saving more isn’t usually an option, working as a senior will be a drag and cat food…well that’s just plain gross, but you know what I mean. Oh, the average investors will blame the stock market or the crazy economy or the President/Congress or the world situation… The reasons for their bad portfolio results are as numerous as there are people with imaginations. Boil it down and these people all use an investment strategy that is well known and widely used. It is called the strategy of greed and fear, here after to be known as G&F syndrome.

When I was practicing, these folks used to tell me (as they pointed and shook their figure at me like my mom used to…often) that’s why they didn’t trust the stock market. “See, I told you that stock market will burn you every time.” Not exactly ma’am. You see the market didn’t burn you, you burned you. How you ask…

Go To Part 2 – The Self-Inflicted Wound

2 responses so far

2 Responses to “You Know This Person—the Average Investor with Self-Inflicted Wounds (Part 1 of 4)”

  1. # Financial Frontlines® » What’s a TSP/401k/IRA Investor to Do?on 07 Jul 2010 at 8:58 am

    [...]  The Average Investor, Part 1, Part 2, Part 3, Part 4. •  In a Bear Market •  Market in Perspective •  Before You Pull [...]

  2. # Financial Frontlines® » “The stock market’s not an investment, it’s gambling.”on 23 Nov 2010 at 11:06 am

    [...] Average Investor Parts 1, Part 2, Part 3, Part [...]

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