We know what contradictions are, but what are financial contradictions? They are thoughts, feelings and actions regarding your investments and financial plans in the short-term that oppose what you set out to achieve with the same investments and strategies over the long-term. Financial contradictions are rooted in unrealistic expectations. Unrealistic expectations about…
1. The market
2. Your risk tolerance
3. Your portfolios
4. Your time horizon
So what are some of the most common financial contradictions?
- Wanting high rates of return with relatively low risk.
- Expecting diversified portfolios to achieve the same short-term returns as what is currently “hot.”
- Expecting to achieve long-term goals by continually selling asset classes that are low priced and buying asset classes that are high priced.
- Expecting to never be uncomfortable with short-term market fluctuations, and then when you are, panicking and taking your money out of the market.
- Believing no one can predict the future, yet expecting someone to be able to tell you which stock will be best tomorrow.
- Believing you should get conservative at retirement, yet having a lifetime to live after retirement.
- Wanting to retire, yet not being willing to save enough for retirement.
- Knowing that one day you will die, however, not having a will.
- Giving our kids too much and then wondering why they are not financially successful as adults.
- Wanting to achieve financial success, yet not wanting to plan for financial success.
- Wanting to win, yet not wanting to be coached on how to win.
Do any of these seem familiar? Have you made any of these financial contradictions in the past? Are you making them now? If you want to change, I suggest you do the following:
- Set definable expectations.
- Hire a financial coach.
- Have a plan.
If you do not know what you must do to meet your goals, how will you ever achieve them? If you do not have an advocate/coach to hold you accountable, how will you stop letting your emotions drive your decisions? If you do not have a plan and the unexpected happens, how will you get back on-track?
Are you willing to be your best?
If you are not willing to be systematic and intentional about your financial success then, consciously or subconsciously, the contradictions in your life will continue to keep you from being the best.