by Tyler Curtis
Nature has equipped us with a lot of defense mechanisms. One of them is the ability to rationalize our feelings, thoughts, fears, and doubts. Evolution taught us to be story-tellers, and we tell ourselves story after story until we imagine one which explains the circumstances we find ourselves in.
We lie to ourselves all the time. We lie about the control we will exercise on our food, about the number of miles we will run every day, about the number of things we will accomplish this year… the list is endless.
Studies show that the more we lie to ourselves, the more we believe these lies to be true. If you keep telling yourself that you are too good for all those weight-loss programs, you will believe that it is true, and you will never be able to stick to one.
At this point you are probably asking only one question: What does all this have to do with investing?
Simple. Like the lies we tell to make ourselves feel better, we also lie to ourselves about the state of our financial goals!
If you think you are being branded a liar, rest assured that is not the case. In fact, these lies often originate from your worries about your financial situation. Most of these deceptions are so sub-conscious that you do not even realize when they turn into bad habits and start destroying the financial plan you have set up.
Here are some examples of the lies we tell ourselves when it comes to investing:
– I don’t ever let emotions get in the way of my investments. I know that stock is a good investment. I didn’t just buy it because a broker gave me a hot tip.
– I am better at picking stocks than this fund manager. He is just throwing darts, while I am doing my research.
– I am cleverer than the market. My analysis is sound, and my judgment flawless.
– It is not my fault that the stock tanked. The market doesn’t know this company like I do.
– I know exactly how well my portfolio is doing. It can’t do any better.
– I totally understand this complex financial product.
– I possess the discipline to stick to every step I need to take for the next 10 years.
– I can make money day-trading since I am smarter than the average trader.
– I missed my savings target for this month, but it doesn’t matter in the overall scheme of things.
– My partner and I know exactly how much our salary is going to rise in the future.
Hopefully, you can recognize some ways that you have been deceiving yourself. If you can, congratulations, you can now step back and see these deceptions for what they really are; obstacles to your financial progress.
This is where a good financial advisor comes in. Your advisor can help you accept and come to terms with the reality of your finances, the steps you need to take, and the goals you need to set for you to attain financial independence.
Lying to ourselves is a part of our nature. But lying to ourselves about our own money can be a costly mistake.
So, what lies are you telling yourself about investing?