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:
What the Ultimate Betterment User Looks Like
We're going to break down how to get the most value out of the goal-based money manager Betterment is designed to be.
What’s Inside the Betterment Portfolio Strategy?
Explore the asset classes in Betterment's recommended set of portfolios. Then, take a look at the exchange-traded funds (ETFs) underlying each part of the portfolio strategy.
Goal-Based Investing: A Decade In Review
As we all look forward to and plan for the future, let’s stop and take a look at the past decade to see what we can learn from it.
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