Recently we have seen unprecedented amounts of market volatility within the last 52 weeks. For those of you inching closer to retirement, you could have some tricky times ahead of you. Knowing which way to turn with your hard-earned retirement dollars can be a difficult task to overcome. How do you sort through all of your options?
In my educational classes, I discuss behavioral economics and the effect these topics have on consumers and the way they invest their money. I would like to talk about one of these ideas in particular called “Decision Paralysis”.
“Decision Paralysis” is the idea of having too many choices, causing the consumer to do absolutely nothing! In a recent study done by Stanford University, consumers buying jars of jelly and jam were monitored in a test. Buyers who were exposed to only 6 jams and made a purchase 30% of the time while buyers exposed to 24 jams made a purchase only 3% of the time.
What does this tell you? Too much information or too many choices can paralyze your decision-making, causing you to do nothing. The same behavior in the grocery store can fall in to your decisions with your investments and your finances. When forced with retirement or making a change, a few things can happen that will cause you to do nothing when deep down, you know it is time to do something!
In this day an age, you can find many different avenues to invest your hard-earned money. Brokers with Merrill Lynch and Edward Jones, independent investment advisors, life insurance agents, your local bank, individual self-management companies like Scottrade and Fidelity, or you can simply leave your qualified 401(k) or 403(b) right where it was – with your previous employer!
How do you make the right decision? Have you ever heard the saying, “A journey of a thousand miles begins with the first step!”? In the case and point of determining and avenue to go down when choosing a company to guide you through retirement – the first step in this journey throughout your retirement years is education. You must educate yourself about your investments! You must educate yourself about your financial phase of life! Most importantly – you must know what you want your money to do for you!
Do yourself a favor. If you are coming close to retirement and the time has come for you to begin investigating your options, educate yourself about the types of investments and strategies before you begin sitting down with people! You owe it to yourself to find someone you can trust and someone whom you have a connection with. The country’s top financial professionals provide solutions to your needs and your desire for your money rather than selling or pitching you on a product. If you are being sold a product or a type of investment, you are probably talking to the wrong person!