Cognitive biases can lead to bad investment decisions.
Buy low, sell high. Were it so easy! When it comes to investments, many of us are swayed more by feelings and intuition than by sound judgment.
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There is an excellent conversation detailed on the Farnam Street website between Shane Parrish and Adam Robinson about stupidity; in particular, why we make decisions that seemingly lack intelligence,common sense or both. I was particularly taken with the definition used for stupidity:
“Stupidity is overlooking or dismissing conspicuously crucial information.”
Is your will drawn up? Do you have a power of attorney?
Aside from ensuring your investments are right for you, your financial advisor should have a healthy interest in ensuring a few other things in your life are addressed. Ensuring you’re prepared and taking the appropriate steps to tie up loose ends if you can’t make decisions, or aren’t around to make decisions, will be a key step.