Have you ever kicked yourself for making a good plan and then not sticking to it? Has it ever happened to you in the financial markets?
For most people, the answer is yes to both. And that has a lot to do with how we biologically respond to financial events. Your brain doesn’t just subtract numbers when you’re losing money, it actually undergoes a neurological response that’s akin to being in mortal danger. This really brings a new perspective to being in a Bear Market. Not a lot of healthy long-term thinking happens when you’re afraid for your life. So it’s easy to succumb to impulsive decisions that depart from your carefully constructed plan.
Alternately, when you’re making money your brain doesn’t just tally numbers either. You experience a neurological response similar to being on cocaine or morphine. Another situation in which long-term thinking is poor. To compound this, your brain’s response when anticipating bad situations or good situations is much more extreme than when actually experiencing them. So even just thinking about upcoming events, good or bad, can lead to procrastination and inertia in your financial life.
The EP Wealth Advisors financial planning process starts with the relationship between you and your financial advisor. How do you value a financial coach? Developing a partnership that ensures we understand your goals lets us help you prioritize and organize your financial decisions—so you can achieve peace of mind and live your life.
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