Flying on Autopilot
We often hear financial experts say “put your finances on auto-pilot”, and there is plenty of data to back up this strategy.
But something about it feels intuitively wrong – when I’m making important decisions with my money, shouldn’t I continue making those decisions every step of the way? Well, unfortunately for us, humans make bad decisions based on emotion all the time…
Even the most sophisticated investors make poor decisions. Paul Graham, partner at VC firm Y Combinator, talks about counterintuitive knowledge in a recent article on his blog. While funding startups is very different to retail investing, the emotions involved are the same. Paul talks about making decisions you know to be right, and how to stick with them when irrational instincts kick in:
“To succeed in a domain that violates your intuitions, you need to be able to turn them off the way a pilot does when flying through clouds.”
Carl Richards touched on something similar last week – what we refer to here at Betterment as the “paradox of choice”. It’s important that we, as investors, are informed … but too much information can get in the way of being a good investor. Anxiety, rather than clarity, is often the result of an information overdose.
It’s good stuff so take a look:
Recommended Content
View All Resources
High-Yield Savings Accounts: The Ultimate Guide
High-yield savings accounts can offer higher interest rates than traditional counterparts. Learn everything you need to know about them in this guide.
How We Use Your Dividends To Keep Your Tax Bill Low
Every penny that comes into your account is used to rebalance dynamically—and in a tax-savvy way.
Congress Just Passed the SECURE Act—Here’s What You Should Know
The government is taking steps to make your retirement more secure. Find out how the new changes might affect you.
Explore your first goal
Cash Reserve
Our high-yield account built to help you earn more on every dollar you save.
Safety Net
This is a great place to start—an emergency fund for life's unplanned hiccups. A safety net is a conservative portfolio.
Retirement
Whether it's a long way off or just around the corner, we'll help you save for the retirement you deserve.
General Investing
If you want to invest and build wealth over time, then this is the goal for you. This is an excellent goal type for unknown future needs or money you plan to pass to future generations.
See details and disclosure for Betterment's articles and FAQs.