The cost of being stubborn is high (in dollars & stress):

The cost of being stubborn is high (in dollars & stress):  

Bottom Line: Yesterday I brought you the story of the emotional mistakes the average investor makes. In that example the average annual return of a self-advised investor was a paltry 2.3% compared to 7.2% by those with a balanced financial plan (over the past twenty years). The cost per $100,000 invested over twenty years was nearly $300,000! On back of that information I sought out additional research on the topic.

For many the best way to not make emotional mistakes with money is to hire a professional to assist. Gallup found that in every category those who use an adviser fare far better (emotionally and otherwise).  

Strongly agree their investment plan is on the right track 

61% - Professional advised

41% - Self advised

Give themselves an A or B grade on knowledge of stock investing 

44% - Professional advised

32%

Strongly agree they feel prepared for a market correction 

39% - Professional advised

24% - Self advised

Have a written financial plan to guide their financial decision-making 

68% - Professional advised

28% - Self advised

Have a diversified investment portfolio 

86% - Professional advised

63% - Self advised

Rebalance their investment portfolio at least once a year 

54% - Professional advised

33% - Self advised

It's especially instructive that only 32% of self-guided investors say they have good knowledge of stocks. It's not possible to be a highly effective investor without effective knowledge of the best performing investment class. That lack of knowledge leads to two common negative outcomes for investors. Making emotional mistakes with the timing of buying and selling stocks or avoiding them altogether. Ignorance can be fixed with more information or a good adviser. Stubbornness is likely to only lead to more stress and less money.


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