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:
Acceptable Reasons for Holding Unused Cash in Smart Saver
When you aren't yet sure when or how to spend or invest your unused cash, we offer Smart Saver, a managed account designed to handle your extra cash.
How We Use Your Dividends and Deposits to Keep Your Tax Bill Low
Every penny that comes into your account is used to rebalance dynamically—and in a tax-savvy way.
Thinking in Bets with Annie Duke
For most people, it’s difficult to say “I’m not sure” in a world that values and, even, rewards the appearance of certainty.
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