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5 Powerful Ways to Set Authentic Financial Goals In Uncertain Times

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What is your biggest obstacle to achieving your goals in 2021?

It’s not a lack of time or bad timing. It’s not age, ability, or finances. And it’s not even the coronavirus.

Believe it or not, research says it’s you.1

In fact, most of us trip ourselves up when it comes to achieving our goals. That includes New Year’s resolutions.2

Even when we have the best intentions, we can get in the way of our own progress.

And that’s far more likely to happen during times of uncertainty.3

That’s when we tend to stagnate. We avoid long-term plans and push pause on our big goals. And we become paralyzed by uncertainty. Sometimes, that means we simply give up on setting goals entirely.4

And, yet, New Year’s goals help us.

They give us a sense of control and keep us grounded in unpredictable times. And they can help us cope with uncertainty and motivate us to keep trying to improve parts of our lives.5

So, how do you overcome uncertainty paralysis? How do you set goals when everything feels so up in the air?

With a handful of simple, powerful principles that can help you set the right goals and expectations.

If you can use these principles as you set and pursue your goals, you’ll be able to choose better goals that are within your power to achieve. You can also discover new paths to progress — even during the most chaotic times.

Click here to read more >

How to Be a Smarter Investor in Uncertain Times

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In a perfect world, logic would always guide our financial decisions. Emotions wouldn’t come into play. But we don’t live in a perfect world, far from it. That means our emotions impact our financial choices more than we realize.1

Shockingly as much as 95% of our purchase choices are made subconsciously, driven by our emotions—as little as 5% are based on logic (and that’s when we’re in the right headspace and feeling comfortable and secure).2

When we’re faced with uncertainty, fear and instinct can take over and push logic right out of the window.3 Your brain will make you want to react quickly to protect yourself and avoid the pain you anticipate from potential losses.4 Ironically, these instincts often make things worse. Emotional reactions can lead to poor choices and the losses you were trying to avoid in the first place.5

How to Be a Smarter Investor in Uncertain Times
In a perfect world, logic would always guide our financial decisions. Emotions wouldn’t come into play. But we don’t live in a perfect world, far from it.

The best way to avoid letting your hardwired biases take over? Use these strategies. They can help you fare better in any crisis. They may even make you a savvier investor.

6 Secrets to Make You a Smarter Investor

1. Avoid the Overconfidence Trap

Overconfidence is a killer. In fact, research shows that the more experience you have as an investor, the more overconfident you tend to be.6

Stay realistic and grounded by a strategy. Get advice before making big decisions.

2. Force Emotions Into the Backseat

Losing money hurts. The truth is that the pain of losses can actually be more intense than any satisfaction from gains. Economists call that “loss aversion.” 7 The pressure of anxiety or uncertainty can lead to irrational choices that actually work against our big-picture financial goals.

Don’t give into fear or panic when they show up. Focus on logic and rely on your professional for guidance.

3. Frame Performance in a More Meaningful Way

Framing is everything when it comes to evaluating performance. That’s because the way information and events are presented to us can sway our perception and influence our decisions.8

Look beyond short-term outcomes when framing performance. Think about your longer-term goals and the progress you are making towards them, even when short-term corrections slow your progress.

4. Neutralize Your Recency Bias

Recent events usually influence you more than those in the distant past. Why? The human brain remembers recent events more clearly and gives them outsized weight when making decisions. Your brain can mislead you by expecting more of what you’ve seen already. And that can lead to overconfidence and emotional decisions.9

Resist this tendency by remembering the market is constantly changing. Over the long term, bear markets recover. And no bull market lasts forever.

5. Consider Multiple Perspectives

With decision making, it’s natural to focus on one aspect or one piece of information as a starting point. Often, that can greatly influence your final choice. This is known as “anchoring bias,” which can give you tunnel vision. It can lead you to fixate on a single data point, like an investment’s price, while ignoring other key information.

To fight it, seek out more information. Think critically about multiple perspectives, and don’t forget to consider future potential.

6. Slow Down & Take Time To Think More Deeply

Humans like to make snap decisions. And, when you’re stressed out, you’re far more likely to make impulsive decisions. The problem is that “gut” decisions are made based on instinct, habit, and emotions, instead of logic and facts. When you’re in gut-decision mode, it can be much harder to make goal-oriented choices.10

Take your time when making financial decisions and let your brain shift into analytical mode. With a little time, emotions cool down, and you’ll typically consider more alternatives.11

Take your time when making financial decisions and let your brain shift into analytical mode. With a little time, emotions cool down, and you’ll typically consider more alternatives.11

Financial Lesson: Keep Your Cool & Focus on the Long Game When Crisis Strikes

Markets and economies are never predictable or under our control. We can’t foresee or control downturns or upswings. We can only control our mindset, our emotions, and our financial choices.

That’s easy to lose sight of during periods of economic uncertainty and financial stress.

But, if you can focus on the long game and improve your mental game, you’ll come out stronger and more prepared.

That can make you less vulnerable to hardwired human biases and help you make better financial decisions, no matter what the markets are doing.

As a financial adviser, one of my most important jobs is to help you become a smarter, more capable investor. That involves using psychology and behavioral finance to help you learn more about how your brain works and improve your financial behaviors.

I’m also here to be an objective accountability partner. I talk my clients through emotional decisions, and I can be an important voice of reason and calm when markets are turbulent and it feels like the sky is falling.

If you’re curious about behavioral finance—or if you need a sounding board for a financial decision—I’m here for you. Don’t hesitate to call me at (971) 350-8068.

I’d be happy to answer your questions and share some more advice.

Sources & Disclosures

1 https://scholar.harvard.edu/files/jenniferlerner/files/annual_review_manuscript_june_16_final.final_.pdf

2 https://hbswk.hbs.edu/item/the-subconscious-mind-of-the-consumer-and-how-to-reach-it

3 https://www.psychologytoday.com/us/blog/the-divided-mind/201207/logic-and-emotion

4 https://www.psychologytoday.com/us/blog/science-choice/201803/what-is-loss-aversion

5 https://www.cmu.edu/dietrich/sds/docs/loewenstein/RoleEmotionEconBehav.pdf

6 https://www.sciencedirect.com/science/article/pii/S0970389615000944

7 https://www.scientificamerican.com/article/what-is-loss-aversion/

8 https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/framing-bias/

9 https://www.sciencedaily.com/terms/anchoring.htm

10 https://www.sciencedirect.com/science/article/pii/S2352289515300187

11 https://www.scientificamerican.com/podcast/episode/making-a-decision-take-your-time-10-04-17/

The following posts and commentary are to be used solely as educational tools and do not contain investment advice. Investment advice must be tailored to a particular investor’s specific needs. None of the information contained should be construed to be investment advice. Individuals wishing to tailor a plan to their own needs should seek the help of a Registered Investment Advisor.

There is a high degree of risk in investing and trading. Independent Investment Advisors assumes no responsibility. Principles of Independent Investment Advisors may, at times, maintain directly or indirectly, positions in securities or derivatives mentioned in these comments.

Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. These are the views of Finance Insights and not necessarily those of the named representative or firm, and should not be construed as investment advice.

THE 6 “HIDDEN” TAX SAVING OPPORTUNITIES OPENED UP BY NEW TAX RULES

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The Tax Cut and Jobs Act (TCJA) passed at the end of 2017 and the SECURE (Setting Every Community Up for Retirement Enhancement) Act passed at the end of 2019 radically changed your tax picture.

Most Americans are going to pay less in taxes under the tax brackets, and a few are going to use this great opportunity to permanently lower the taxes they pay. The COVID-19 pandemic and relief acts also spurred new tax wrinkles you should know about.

I want to emphasize that this is a limited opportunity. The 2017 rules are scheduled to expire in 2025 (if they don’t disappear sooner under a new administration), and most taxpayers will see a tax hike.

However, this sneaky IRS move means you’ll probably pay more in taxes even before they expire. To reduce the impact of the new tax laws on government revenue, the IRS changed how it increases things like thresholds, deductions, and credits for inflation.3It sounds like a minor procedural move, but it’s actually a big deal. In plain English, this change means that many taxpayers will “creep” into higher tax brackets as their incomes grow because the tax brackets themselves won’t increase as much as they used to for inflation.

Bottom line: many taxpayers will pay more in taxes over the next few years due to this hidden tax increase. It might be only a few hundred dollars every year, but over time, even small tax increases add up! Unless you take steps now to reduce your taxable income. The current tax rates might be the lowest you’ll see for the rest of your life, and I want you to make the most of them.

All 6 opportunities in this guide are actions you can take right now to potentially lower your taxes this year and in the years to come. I strongly recommend that you take this list, along with your tax return, to your CPA and financial adviser to see which tax reduction opportunities have opened up for you.

Is Your Investment Portfolio Facing Volatile Markets?

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A Simple Flowchart to Determine What (if Anything) You Should Do.

After the end of the 2008 financial crisis, investors rode a wave of optimism for close to a decade, pushing markets past historical highs and giving investment portfolios a healthy boost after the losses sustained during the bear market downturn. However, there are signs that the relentless market optimism is petering out, and I want you to be prepared for volatility. Though we can’t predict the future, expecting the next few years to be volatile is a smart bet. Whether you are in retirement or close to it, or many years away, this simple flowchart will guide you through the questions you need to ask to help determine whether you’re on the right track for volatility or dangerously off course with your investments.

When Advisors Can’t Access Your ETF?

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This is a great article highlighting the significant value and the advantage Independent Registered Investment Advisors (RIA) have over traditional wirehouse advisors. Jillian DelSignore from ETF.com covers the distribution issues and challenges of Exchange Traded Funds (ETF).

“For the advisor, however, it’s: Can they access the ETFs they want for their clients? That may sound like a given, but it’s far from it.”

“For example, as an RIA, an advisor can access any ETF they want. Depending on where they custody their assets, some of those ETFs are commission-free, even though that became irrelevant last year when the major custodians entirely did away with commissions on ETFs. As an RIA, the ETF world is your oyster.

Now, if you instead are an advisor at, say, Morgan Stanley or Wells Fargo, the ETF world is not your oyster. Your world consists of a subset of ETFs on the market based on what your platform has approved for your access. Keep in mind that this is not unique to those two firms.”

You can find the complete article at https://www.etf.com/sections/features-and-news/when-advisors-cant-access-your-etf