Helping clients balance their heart, mind and portfolio

Investor Newsletter - Fall 2014
As investing has become more accessible to – and arguably more necessary for – most Americans, rarely a day goes by where investors don’t encounter some sort of investment information: market commentary on TV, a stock tip (or saga) from a friend, or their own portfolio statement.

But knowing how, when and whether to use that information to help reach personal financial goals can be challenging for many investors. Especially because decisions about money are often a tug-of-war between the heart – or emotions – and the rational mind. If markets are rising, an investor’s emotions may make them feel optimistic and greedy – tempting them to invest more or invest more riskily. The mind, meanwhile, is likely to offer a more rational response, offering a reminder that investing is complex and can rarely be reduced to a universal “Buy This Now” or “Sell That Immediately” instruction.

The key is to help your clients find balance between their heart, their mind and their portfolio. That is the focus of this quarter’s Investor newsletter, which you can download and share with your clients. In it, your clients will be reminded of the value of working with you to:

  • create a personal, disciplined investment plan that can help them stay immune from the heart-versus-mind frenzy during times of market volatility;
  • maintain a well-diversified portfolio that can help them stick to their long-term plan, even though diversification doesn’t guarantee a profit or protect against loss;
  • help keep their emotions in check to avoid making emotionally-charged decisions.

The bottom line

One of the toughest parts of investing is that markets are unpredictable. That uncertainty can trigger emotions like euphoria and despondency that can lead many investors to make short-sighted emotional decisions rather than long-term rational choices. Luckily, though, the cycle of human emotions is more predictable. Use the Cycle of Investor Emotions chart in this quarter’s Investor newsletter to engage your clients in a conversation about their emotions of investing in an effort to help them maintain a balanced portfolio and a sustainable financial plan.

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