What Should I Be Invested In?

I would try to encourage his critical thinking with “Tell me son, do you know anyone who is buying crypto that intends to use it as a currency, are you intending to be able to purchase items with your crypto? Do you see how tweets drive the crypto price? What do you think about that?”. Well, the lads all decided to have a shot at crypto’s and I heard all the wins “its up blah blah blah % and I have made blah blah blah $”.

Right about here Elon tweeting was about to serve these boys a life lesson; can you handle the risk?

Turns out these punks couldn’t! They backed out so fast trying to exit the trade when it hit the skids. Meanwhile I backed my personal investment strategy of 1) I don’t invest in certain investments 2) this doesn’t feel right to me 3) massive price swings concerns 4) belief FOMO driving demand 5) Quality investments for ease of trading.

 Love the crypto success stories yet happy to sit it out until it meets my selection criteria.

Behaviour finance is fascinating and important to consider. In the above I saw my son focus on a specific investment and he found resources that confirmed his thinking. He suffered herd mentality and wanted to get on the wagon while it was on the rise and listened to all the noise. He believed he invested only what he could lose yet struggled with the volatility. Had I done a risk profile before and after he may have slightly different answers based on this experience.  

As an adviser I see different versions of this with clients, instead of crypto it can be property. Instead of high appetite for risk, you fear losses and avoid growth investments. Instead of personal experience it may be a parent’s experience. Instead of a confident investor you may feel you don’t have enough knowledge on financial markets. Instead of maintaining your portfolio across growth and defensive assets you focus on yields and expose yourself to more risk.

A skilled adviser should discover this about you and challenge any biases, find palatable solutions to have you well invested with your own personal investment strategy that serves your goals and risk profile. The benefits of working with such an adviser can be seen particularly over COVID when many Australians panicking and reacting to the market volatility vs clients that have developed an investment strategy taking the time to review investments and respond based on their plan.