Don't Let Fear Drive Investment Decisions

Author

Edward Jones - Chad Choate, AAMS

Posted on

Feb 13, 2023

Book/Edition

Florida - Sarasota, Bradenton & Charlotte Counties , Florida - Southwest

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 In the past year, we’ve seen some big swings in the financial markets. This volatility may make you feel as if you have little control over your investment success. But the truth is, you do have more control than you might think — as long as you don’t let fear guide your
decisions.

Investment-related fear can manifest

itself in a few different ways:

Fear of loss

Some investors may emphasize avoiding losses more than achieving gains. Consequently, they might build portfolios they consider very low in risk, possibly containing a high percentage of certificates of deposit (CDs) and U.S. Treasury securities. Yet, a highly conservative approach carries its own risk
the risk of not achieving enough growth to stay ahead of inflation, much less meet long-term goals such as a comfortable retirement. To reach these goals, you’ll want to construct a diversified portfolio containing different types of assets and investments — each of which may perform differently at different times. Your objective shouldn’t be to avoid all risk which is impossible but to create an investment strategy that accommodates your personal risk tolerance
and time horizon.  
        

Fear of

missing out
– You’re probably familiar with the term “herd mentality”
the idea that people will follow the lead of others for fear of missing out on something. This behavior is responsible for fads or the sudden emergence of “hot” products, and it’s also relevant to investing. In fact, herd mentality may contribute to sharp jumps in the financial markets as investors drive up prices by buying stocks to avoid being left behind. And the same may be true in reverse when the market starts dropping, skittish investors may accelerate the decline by selling stocks so they, too, can get out before it’s too late. Buying or selling investments should be considered as needed to help advance your long-term financial strategy not in response to what others are doing.

Fear of the unknown – Some investors

fall victim to “familiarity bias”
the tendency to invest only in what they know, such as local or domestic companies. But this behavior can lead to under-diversified portfolios. If your portfolio is dominated by just a few investments, and these investments are fairly similar to each other, you could experience some losses when the inevitable market downturn occurs. To help reduce the impact of market volatility, it’s a good idea to spread your investment dollars across large and small companies in a range of industries 
and geographical regions. And that’s just on the equities side
it’s also wise to consider further diversifying your portfolio by owning bonds and government securities. (Keep in mind, though, that diversification can’t guarantee profits or protect against all losses.)

Fear of

admitting failure
– Some individuals don’t like to admit when they’ve been wrong about something, and they may continue the same failed activities, hoping for eventual success. This behavior can be costly in the investment arena. Sometimes, a particular investment, or even an investment strategy, just doesn’t work out, but an investor is determined to stick with it
even if it ultimately means considerable financial loss. Don’t let his happen to you if it becomes apparent you need to change your investment approach, move on to something better.

Fear can hold

us back in many walks of life
but don’t let it keep you from making appropriate investment moves. 

Chad Choate III, AAMS


Financial Advisor | Edward Jones

828 3rd Ave W

Bradenton, FL 34205

941-462-2445   Chad.Choate@edwardjones.com 


 This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC

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Experience and BackgroundI am a financial advisor in Bradenton, FL, and began my career with Edward Jones in 2017. As a financial advisor, I want to find out what's important to you and help you build personalized strategies to achieve your goals.As a lifelong Manatee County resident, I graduated from the University of South Florida and was a teacher in Manatee County before joining Edward Jones. My driving force is to change people's lives in a positive way, and what better place than my home to do that.Whether you're planning for retirement, saving for college for children or grandchildren, or just trying to protect the financial future of the ones you care for the most, we can work together to develop specific strategies to help you achieve your goals. We will also monitor your progress to help make sure you stay on track or determine if any adjustments need to be made. Throughout it all, we're dedicated to providing you with top-notch client service.But we're not alone. Thousands of people and advanced technology support our office so that we can help ensure you receive the most current and comprehensive guidance. In addition, we welcome the opportunity to work with your attorney, accountant and other trusted professionals to deliver a comprehensive strategy that leverages everyone's expertise. Working together, we can help you develop a complete, tailored strategy to help you achieve your financial goals.I currently volunteer with the Manatee Hurricane football Broadcast and Booster Club, serve on my church's trustees council and have previously served as a leader in Young Life. I am a member of the Manatee Chamber of Commerce and an alumnus of their Leadership Manatee program.I have been married to my childhood sweetheart, Ashley, for 15 years and we have a son, Wesley, and daughter, Camryn. We enjoy watching our children play their sports and traveling as a family.

Edward Jones - Chad Choate, AAMS

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