3 Common Human Errors in Investing that the Elderly Should Be Aware of
Are you 65 or older and you are looking for someone or a situation to blame for not having a great performance in your investing efforts? Well, you should check again, specifically the mirror in front of you. You are probably the major problem. Here are some of the most common errors that older investors tend to make in investing.
- Focusing only on today
Older adults tend to focus only on today instead of focusing on the future. It can naturally be difficult to see the value and importance of saving money for tomorrow while there is a lot to spend it on today. This myopia can be very dangerous to you as an investor as it can make you either too passive or too active. Being too active might drive up trading expenses and results in lower returns. Someone who is too passive may avoid normal check-ins on financial health or need Short Term Health Insurance 2020 from https://www.healthinsurance2020.org and instead stick with the status quo that does not prepare properly for the future.
- Making emotional decisions
In more often than not, decisions about money are not always rational, even when we believe we are acting reasonably. In other words, it’s not easy to block emotions from creeping into your decisions when money is on the line. On a stock-specific basis, senior citizens tend to allow their emotions to dictate when to sell even if it’s obviously a losing bet. Many investors often hold on to obviously losing investments for too long, and sell winners too quickly whenever they go up. To avoid making emotional decisions, think about your individual investments in the perspective of your entire portfolio and create a plan for when you will sell instead of allowing your decisions to be triggered by emotions or short-term factors.
- Pursuing past predictions
Even though financial institutions often remind investors that past performance does not guarantee future results, only few senior citizens listen. Even though it can be tempting for you to look at the broader market’s or stock’s recent performance and make a conclusion that gains are going to persist in the near future, it is not always the right thing to do. Investors usually consider a very small sample of data and then draw a major conclusion, and that is dangerous. Avoid basing your investing decisions only on what had happened in the past. Also think about what is likely to drive gains tomorrow and in the future.