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Politics touches so many aspects of our lives, from our financial stability to the future we envision for our families, that it’s natural to feel personally and directly impacted.
You’ve probably done it all your life. First you (or your parents) enrolled you in a good kindergarten. From there, you ‘graduated’ to a solid grade school. Then came an excellent high school, after which you were lucky (and hard-working) enough to be admitted to a top-notch university. It’s been a step-by-step – and well laid-out – progression your whole life.
Isn’t that how careers (and lives) are supposed to work? All nicely laid out with one pre-ordained step after the other?
Yes, investment returns matter. But your basic assumptions about and behavior toward money will probably impact your finances – and your eventual wealth – more than you currently imagine.
We’ve written recently about the relationship between personality and financial behavior. And it’s a well-known fact that wealth accumulation and investment management is affected as much, if not more, by non-financial factors as by financial ones. Because financial outcomes depend so heavily on behavior, how you manage your emotions in connection with your finances plays a huge role in the type of investing and financial management experiences you have. In particular, the emotional urge to “do something” in response to short-term changes in market conditions often delays or derails many investors’ progress toward their long-term financial goals.
A recent article in the Wall Street Journal explores an intriguing proposition: “How Your Personality Can Affect Your Portfolio.” It’s worth paying attention to, especially given the effort that so many of us expend to improve our financial outcomes.
There is a good reason why money frustrates so many people. It frequently works in ways that are simply unnatural for our hunter-gatherer brains to grasp.