Dear Valued Clients,
In the world of investing, success is not solely determined by market trends or economic forecasts. Rather, it often hinges on our ability to navigate the complexities of human behavior and emotion. That's where behavioural coaching comes into play – a powerful tool that can significantly enhance your investment outcomes. Behavioural coaching recognises that our decisions as investors are influenced by a multitude of psychological factors, from fear and greed to overconfidence and herding behavior. By understanding and addressing these behavioral biases, we can make more informed and rational investment choices, ultimately leading to better long-term results. Here's how behavioral coaching can benefit you: 1. Emotion Management: Investing can evoke strong emotions, particularly during periods of market volatility. Behavioural coaching helps you recognize and manage these emotions, preventing knee-jerk reactions that could derail your investment strategy. By maintaining a calm and rational mindset, you can avoid impulsive decisions that may harm your portfolio's performance. 2. Goal Alignment: Behavioural coaching focuses on aligning your investment decisions with your long-term financial goals. By clarifying your objectives and risk tolerance, we can tailor an investment strategy that reflects your unique needs and aspirations. This ensures that your portfolio remains aligned with your overarching financial plan, providing a clear path towards achieving your objectives. 3. Overcoming Biases: We all harbor cognitive biases that can distort our perception and decision-making process. From anchoring bias to recency bias, these cognitive pitfalls can lead to suboptimal investment outcomes. Behavioural coaching helps you recognize and overcome these biases, allowing you to make more rational and objective investment decisions. 4. Long-Term Perspective: One of the key principles of behavioural coaching is promoting a long-term investment perspective. By focusing on the bigger picture and tuning out short-term noise, you can avoid making reactionary decisions based on temporary market fluctuations. This disciplined approach fosters patience and resilience, essential qualities for successful long-term investing. 5. Accountability and Discipline: Behavioural coaching instills accountability and discipline in your investment approach. By adhering to a well-defined investment plan and regularly reviewing your progress, you stay on track towards your financial goals. This disciplined approach helps you resist the temptation to deviate from your strategy, ensuring consistency and continuity in your investment journey. In conclusion, behavioural coaching serves as a guiding light in the often turbulent waters of investing. By harnessing the power of psychology and emotion, we can navigate market uncertainties with confidence and clarity. As your trusted advisor, we are committed to providing personalized behavioral coaching to support you on your investment journey. Remember, successful investing is not just about numbers – it's about understanding human behaviour and making smart decisions accordingly. Together, let's harness the power of behavioural coaching to achieve your financial goals and secure a brighter future. Best regards, Kevin Yeh, CFP Director
0 Comments
The festive season is a time to switch off from work, recharge the batteries and spend quality time with friends and loved ones. It is also a time when many people throw caution to the wind, and sometimes, their budgets as well.
You can avoid a financial hangover in the new year by considering the following tips: Create a spending plan. Draw up a financial plan that accounts for your wants and needs between the end of November to January. As many people get paid early in December, the goal should be to stretch the November salary as far as possible into December, so as not to dip into their year-end paycheck too soon. Prioritise debt and savings. If you are fortunate enough to receive a bonus, maximise the windfall by allocating a portion to your savings and investment accounts. Provisions should also be made for paying off outstanding debt. Hide the credit card. If you are ill-disciplined, remove your credit cards from your wallets to avoid unnecessary and costly spending. Beware of festive season scams. Phishing attacks are prevalent at this time of the year. Be sure to examine emails and SMS messages very carefully, and be cautious of clicking on links. Always hover over links before clicking on them and take note of the URLS they direct you to. Death, while an incredibly difficult subject to confront, is one of life's unavoidable realities. Yet many investors fail to prepare for this eventuality and put their loved ones' financial futures at risk. According to The Fiduciary Institute of Southern Africa, more than 75% of South Africans pass away without a valid will drawn up.
In the spirit of National Wills Week this month, we want to empower you to prepare adequately and help you leave a lasting legacy by posing these questions: • Is your will up to date? Make sure you keep me abreast of any material and life-changing events, such as marriage, the birth of a child, or a death in the family. • Are your retirement fund nominees' details up to date? • Are the beneficiaries of your various policies up to date? If your investments are structured as a life policy, you will need to make sure your service provider has the correct beneficiary appointments on file to ensure speedy payment to your intended beneficiaries. • Have you planned for immediate needs? Make sure you have made provisions for any immediate expenses, such as funeral costs, that may need to be covered before your investments can be accessed. • Have you spoken to your beneficiaries, dependents, and nominees about the contents of your will? Contact us on service@daberistic.com if you want a financial planner to review your financial affairs. Research indicates that women tend to dedicate more time to researching their investment options and are twice as likely as men to rely on financial advisers for guidance in their financial planning decisions. Numerous studies also suggest that women approach investing with a longer-term perspective and are more inclined to hold investments for extended periods rather than attempting to time the market. These characteristics can be leveraged to achieve financial independence and close the investment gap.
As we commemorate Women's Month, here are four tips to empower women to take control of their financial well-being: 1. Establish a budget and define financial goals. Avoid vague objectives and strive for specificity. For example, rather than setting a general goal like "save money for the future," define specific objectives such as "save R10,000 per month for retirement by contributing R5,000 to a retirement fund and R5,000 to a long-term investment portfolio." This level of specificity provides clarity and direction, making it easier for you to track your progress and stay committed to your financial goals. 2. Develop a comprehensive plan. This should encompass both a savings strategy (including an emergency fund) and an investment plan. 3. Automate the process. Set up debit orders for your investments and consider scheduling annual escalations in advance. This will help you invest more every year on autopilot. 4. Allow decisions time and space. Recognise your biases and external influences, and be thoughtful in your decision-making. Here are three common examples of biases: 1. Confirmation Bias: This is the tendency to search for, interpret, favour, and recall information in a way that confirms one's preexisting beliefs or hypotheses. For example, you might be more likely to remember and focus on information that supports your investment decisions while ignoring or downplaying contradictory information. 2. Overconfidence Bias: This bias involves overestimating one's own abilities, knowledge, or judgments. It can lead to taking excessive risks in investments or being overly confident in the success of certain strategies without considering potential downsides. 3. Loss Aversion Bias: Loss aversion refers to the tendency to strongly prefer avoiding losses over acquiring gains of the same or similar value. It can lead to overly conservative investment decisions, such as holding onto losing investments for too long in the hope that they will recover, rather than cutting losses and reallocating funds to more promising opportunities. Given the vast amount of change in the financial advice industry over the years, a recent NMG survey advisers asked advisers to rank what trends they are most worried about when it comes to their business. The primary worry for advisers (when viewed from an internal perspective) was technology, followed closely by clients, and then succession planning. I had the privilege to unpack these concerns with Jaco van Tonder from Ninety One and Georgina Smith from INN8 Investment Platform, at the recent Morningstar Investment Conference. Source: Morningstar
Why fees are not the only determinant to financial success Managing funds and investments requires time, money and expertise. As with any service provider, you are expected to pay a reasonable fee for the use of a company’s products and/or services. The same rule applies in the world of investments and fund management. Warren Buffet’s wise words “Price is what you pay, value is what you get” speak to the actual price that you pay for an asset, stock or investment, versus the intrinsic worth and added value of that investment. The same train of thought can be applied when it comes to the fees paid for investing. Fees are most certainly an important aspect to consider, however, it’s not the only factor that should be considered, but rather be seen as one piece of a larger puzzle. Source: Morningstar
Welcome to 2023 – a new year and a blank slate of 12 months, 52 weeks, 365 days, 8760 hours and 525 600 minutes to make changes, take on new opportunities and set new goals. We all kick off a new year with certain resolutions in mind, such as eating healthy and exercising more. More often than not, it’s not just our dress or pants size that feels a bit tighter than before the holiday indulging, but also our purse strings. Too many people are left with more month than money after holiday spending, with January probably feeling the hardest. Whether or not you have an extra dime to spend at the end of a year, or perhaps at the start of this new one - by means of employee rewards (such as a bonus), or by not spending all you set aside for the holiday gifting season - why not use the start of the new year to get that savings mindset into gear. If you have overspent, drawing on the below tips in the new year is even more important. |
AuthorKevin Yeh Archives
January 2025
Categories
All
|