Myth #8 I Can Beat the Market
Financial Myth’s Blog Series
Unfortunately, much of the information relating to money that permeates our thinking as individuals and as a society is based on myths. This misleading information has no factual basis and can actually prevent us from achieving our financial objectives. This week we’re dealing with the fallacy that you can beat the market.
Follow along with us through the Financial Myths Blog Series. You may be surprised by what you discover about yourself and your financial plan!
Myth #8 – I Can Beat the Market
Of course, we all want to beat the market. But if we are trying to beat the market, chances are we are gambling!
The biggest enemies of your financial success are emotion, lack of diversification, and not understanding risk. My goal as a financial planner is to help people reach their goals and dreams while minimizing chance in the equation.
I am not worried about beating the market.
People always talk about what was in favor in the last few years. That can be gold, S&P 500, dividend stocks….. And the list goes on! But I am not worried about what did well the last five years (which probably means it is overpriced and in favor). Instead, we should worry about what brings the probability of success to our plan.
Many investors underperform the market because a hunch was wrong, costs were too high, or they got emotional. A “hunch” is fine if it does not affect your financial future.
So, don’t try to beat the market.
Try to be predictable, with probable results based on facts that bring the highest probability of success to your plan. We should be well-allocated and diversified, stay true to our risk tolerance, and have a strategy that integrates cash flow, goals, short-term needs, income, and expected expenses. All wrapped into a comprehensive plan that is not worried about beating the market. Focus on reaching your goals within your comfort level (risk tolerance).
Returns are not our friend – the probability of success is! Let’s reach tomorrow without worrying about short-term results. Rest easy knowing your success is likely secured when you successfully implement a plan that’s unique to your goals!
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