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    Are You Acting Against Your Own Financial Interests?

    By Brandon Miller, CFP–

    Five minutes after I met my friend’s puppy, the little fur ball had broken the skin on the bridge of my nose and the back of my hand. Thankfully, fingertips are much tougher and mine survived relatively unscathed. Skin is interesting like that, growing thick and thin in various places to provide a barrier between you and the environment (needle-sharp puppy teeth notwithstanding).

    Barriers usually conjure up a roadblock between us and our goals. But some barriers—such as skin—actually protect instead of restrict us. A barrier between you and your riches could be a beneficial defense too.

    That’s because it’s hard to be dispassionate about money. Fear of losing it, guilt from making it, frustration at not having enough of it, desire to do something important with it—these barely scratch the surface of the passions that money stirs up. And feelings can be unconscious, stemming from early experiences with your family’s financial situation.

    But making money decisions based on emotion instead of cold, hard numbers may not be the best route to Millionaire’s Row. In fact, behavioral finance is big business these days because it helps bring to light how biases and emotions can lead to investment pitfalls.

    On the other hand, things that help you act more rationally could fatten your portfolio. Here are three simple ways to distance yourself from acting against your best financial interests.

    Automated Actions

    This is one of my favorite tactics because it’s easy to initiate and requires next-to-no effort—and very little willpower—to maintain. Saving for a goal? Schedule a set amount to be deposited each month into an account that you won’t easily tap. Want to increase what you’re putting away? Have the amount automatically increase in manageable increments every month or quarter. Invested too heavily in a particular industry or stock? Sell off a portion of your largesse every month.

    Setting up these actions to happen automatically keeps you from finding other uses for that money and helps overcome the inertia humans are prone to. Since we’re also programmed to like routines, saving or selling regularly can become a comfortable habit that happens in the background of your busy life.

    And it has another big advantage called dollar-cost averaging. As any good financial pro will tell you, time in the market not market timing is key to success. Rather than trying to guess market moves, investing/selling a fixed amount at regular intervals—regardless of share price—puts you at the door when opportunity knocks. That might mean being able to buy more shares in down markets when prices are low, or selling shares at a higher price when the stock is up. And, of course, it takes your emotions out of the equation so you don’t unintentionally undermine your portfolio by going in and out of the market.

    Mutual Funds

    This may seem an odd choice for a financial barrier, but not compared with individual stocks. Mutual funds give you microshares of many different companies versus putting all your eggs in one basket with one company. While anyone who invested in Apple in the ‘90s might brag about their ability to pick a winner, how many of those same investors tried to repeat that glory with crypto golden-child FTX? Mutual funds help take the ego out of investing, while enabling you to invest in what you believe in, such as emerging technology.

    Index funds and ETFs can be winners while minimizing risk since indices and exchanges tend to go up over time versus the rise or fall of any one stock. Funds based on time horizons can also be a great choice because they automatically rebalance based on how close you are to your goal.

    Professional Guidance

    If you want a barrier as thick as the palm of your hand, turn to a financial pro. An industry-trained, third-party opinion is one of the best ways to distance yourself from financial decisions that don’t really work for you. A financial planner or coach can point out when your thinking isn’t supported by the numbers or can point you toward new opportunities.

    In summary, being emotional about money isn’t the issue. It’s how you act on those feelings. You might find it easier to invest more rationally by erecting a few simple barriers—just like the chew toy I intend to put between me and the puppy the next time I see her.

    Brio does not provide tax or legal advice, and nothing contained in these materials should be taken as such. The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.

    Brio Financial Group is a registered investment adviser. SEC Registration does not constitute an endorsement of Brio by the SEC nor does it indicate that Brio has attained a particular level of skill or ability. Advisory services are only offered to clients or prospective clients where Brio Financial Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Brio Financial Group unless a client service agreement is in place.

    Brandon Miller, CFP®, is a financial consultant at Brio Financial Group in San Francisco, specializing in helping LGBT individuals and families plan and achieve their financial goals. For more information:

    Money Matters
    Published on August 24, 2023