WHY EMOTIONAL INVESTING CAN
HURT YOUR RETIREMENT PLAN
WATCH ON YOUTUBE
| Sandy Hornor | CEPSManaging Director, Wealth Management & Executive Manager | Tessa HallMedia and CommunicationsSpecialist |
About This Episode
The financial advisor who was right for you 10 or 20 years ago may not be the right fit for your financial life today. As wealth grows and retirement approaches, financial decisions often become more complex.
In this episode of Healthy, Wealthy & Wise, Tessa Hall speaks with Sandy Hornor, Managing Director of Wealth Management at BWFA, about how to evaluate your current financial advisor. They discuss trust, communication, comprehensive financial planning, tax strategy, fees and whether your advisor has grown alongside your needs. Sandy also shares one revealing question to consider: if you were starting over today, would you hire the same advisor again?
To learn more about BWFA’s Financial Planning services, visit our Financial Planning page.
What You’ll LearnHow can emotional investing affect your retirement portfolio?Emotional investing can lead retirees to make major portfolio changes based on short-term fear or excitement rather than their long-term financial plan. Tyler shares an example of an investor who moved an approximately $3 million portfolio to cash during the COVID market decline. That decision locked in a roughly 30% loss rather than allowing time for the portfolio to potentially recover.
Why can panic selling be especially damaging in retirement?Panic selling turns a market decline into a realized investment loss and may disrupt a strategy designed to support decades of retirement. Retirees may understandably feel more protective of assets they spent years accumulating. However, Tyler emphasizes the importance of understanding how cash, fixed income, and other investments are structured before abandoning a long-term strategy.
How does FOMO influence investment decisions?Fear of missing out can encourage investors to chase popular investments based on recent performance or conversations with others. Tyler discusses examples involving gold, IPOs, cryptocurrency, and individual companies. Concentrating a significant portion of a retirement portfolio in one investment can introduce additional risk, particularly without a clear strategy for when to exit.
How can retirees make better investment decisions during market volatility?Retirees can begin by evaluating a potential change against their long-term investment strategy, risk tolerance, financial needs, and overall retirement plan. Tyler recommends discussing major decisions with an advisor before acting on short-term market movements. A diversified portfolio and clear understanding of its purpose can provide valuable perspective when markets become uncertain.