The report also found substantial improvement in investment decisions as people aged. Older investors were much less likely to trade too often, try to time the market or base investments on short-term considerations.
They were also more satisfied with their financial situation.
Barclays Wealth also found that women are better long-term investors than men, who tend to take more risks and are more likely to favor frequent trading and efforts to time the market.
"Women tend to have lower composure and a greater desire for financial self-control, which is associated with a desire to use self-control strategies," the report said.
"Women are also more likely to believe that these strategies are effective." As a consequence, women tended to trade less and earn higher returns over time.
Barclays Wealth sponsored surveys of more than 2,000 people from 20 countries who had at least $1.5 million in investment assets, including 200 with at least $15 million. These investors may not have known the details of their emotional flaws as documented by behavioral economists. But they were aware that they were prone to bad decisions and were open to getting help.
The report identified seven self-control strategies to help people counter their tendencies to make bad decisions. The use of these strategies was not limited to investments and often included other behaviors, such as big-ticket purchases or dieting and exercise.
Here are the seven strategies and their application to financial decisions:
1. Limit the options. Purchase illiquid investments to avoid the urge to sell investments when the market is falling.
2. Avoidance. Avoid information about how the market or portfolio is performing in order to stick to a long-term investment strategy.
3. Rules. Establish and use rules to help make better financial decisions, such as spend only out of income and never out of capital.
4. Deadlines. Set financial deadlines. For example, aim to save a certain amount of money by the end of the year.
5. Cool off. Wait a few days after making a big financial decision before executing it.
6. Delegation. Delegate financial decisions to others, such as allowing an investment adviser to manage your portfolio.
7. Other people. Use other people to help reach financial goals. An example would be meeting with a financial adviser to make and execute a financial plan.
This article was reported by Philip Moeller for U.S. News & World Report.
VIDEO ON MSN MONEY
Dont worry. by the time the markets open today stocks will surege and it will be becuse the wind changed direction at the polar caps and the gonkulator will be in sink with the flux capacitor.
"I hope that sounds as stupid as some of the reasons the market changes"
I need some help on investing some of my retirement money.
I would like to put about $1000 month, into the transportation of Oil. Some in the Tankers, carrying it it to the US, and some into maybe the pipelines, that carry it from refineries, to it's (gasoline's) selling point.
What are the companies that do this and should it be direct stock into them, or are there (EFT's of sort) for them? How can I find them.
Any insight, would be appreciated.
Advice indeed. Sounds more like something Suzy Orman would say... and she contradicts herself more often than Congress.
Her latest "seminars" profess... "forget everything I've been telling you, because circumstances have changed."
Really, Suzy? Really?
And people still listen? Really?
(all this article does is give you a few common sensical investing idioms and the rest is drivel)
You completely forget to mention the biggest problem, being the average inflation is about 120 % per decade, so if you invested 10 K 10 Years ago, that in just 10 years "money actual value" is only "worth" about 4500 , I can not understand that no one is ever realistic
Even at 5 % a year in return , that will never make you money!
It assumes you're buying high when the MARKET is high and vice-versa. That's not necessarily true. Stocks can be undervalued or overvalued at any time.
One measure of "low" is when the P/E ratio is less than the projected percent annual expected long-term growth rate. Right now near a market high you can buy companies "low", like FCX (P/E = 9.43, 10% expected long-term annual growth rate), the world's largest copper producing company and owner of the world's highest-known-reserves gold mine.
Hewlett-Packard (HPQ) has run into minor growth trouble due to the Japanese Earthquake and the world-wide slowing of PC sales, but it's about to become the world's largest producer of servers, is releasing a iPad competitor, has plenty of products in it's new-product pipeline and is still selling two and half times as many computers as Apple. Yet its P/E is 8.57 and it's expected long-term annual growth rate is 9.22%.
If these companies continue to grow steadily, odds are they will be the ones the money is attracted to if the market falls. So they might be "high" when the market is low just as they're "low" when the market is high
A lot of this seems to be how to make decisions, deciding between right and wrong. Being a disciplined trader is more than half the battle when trading anything of that matter. Getting your emotions under control and not getting consumed by losing trades or vise versa. I started trading futures a couple years back and after i blew out my first I knew i had to make some big changes in my emotional approach. I came across the discipline cycle at the Schooloftrade.com and that really changed the way i trade. I don't think i would be able to continue trading today if i wouldn't have found this in the past.
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