For months, we’ve watched the spreading disaster of the oil spill in the Gulf and its impact on the environment, the economy and the financial well being of individuals in the area. The clean-up effort now seems to be making progress, with the placement of a cap over the remains of the well, but the contamination will take years to undo.
Unlike oil in the Gulf, the spill of financial information continues to spread, and it can contaminate the ability of investors to make decisions about their finances. Certainly freedom of information is an important part of our nation’s structure, but like all of our freedoms, with it comes responsibility. And in today’s world, with its constant flow of information from sources both credible and crank, that responsibility may include placing our own cap over the flow.
Kiplinger magazine recently discussed a research experiment by behavioral economist Richard Thaler in which the subjects “managed” a hypothetical college endowment consisting of two investments over 25 years. The subjects could choose how often they received performance information and how often they could trade. As Kiplinger summarized, “The results revealed an information paradox: Less can be more. Participants who received information once every five years, and could trade only that often, earned returns that were more than twice those of participants who were updated monthly and could trade that frequently.”
This isn’t to say that investors should remain blissfully ignorant about investment trends and their own finances. It does show, however, that having frequent access to a glut of information does not necessarily result in better decision making. For that reason, we advocate meeting with you at least annually to review your circumstances and progress toward your financial goals. We also recommend being selective about the information you gather. And feel free to contact your personal financial advisor, Jordan, any time you have a question at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com.
Income distribution planning is one of the most important areas for proper retirement planning. The ability to provide dependable and predictable income distribution will be necessary to enjoy a comfortable retirement. The Income for Life Model™ is a proven retirement solution which focuses on providing lifetime, inflation-adjusted income.
Does More Information Result In Better Financial Decisions? Week of August 2, 2010
by Jordan Dechtman
For months, we’ve watched the spreading disaster of the oil spill in the Gulf and its impact on the environment, the economy and the financial well being of individuals in the area. The clean-up effort now seems to be making progress, with the placement of a cap over the remains of the well, but the contamination will take years to undo.
Unlike oil in the Gulf, the spill of financial information continues to spread, and it can contaminate the ability of investors to make decisions about their finances. Certainly freedom of information is an important part of our nation’s structure, but like all of our freedoms, with it comes responsibility. And in today’s world, with its constant flow of information from sources both credible and crank, that responsibility may include placing our own cap over the flow.
Kiplinger magazine recently discussed a research experiment by behavioral economist Richard Thaler in which the subjects “managed” a hypothetical college endowment consisting of two investments over 25 years. The subjects could choose how often they received performance information and how often they could trade. As Kiplinger summarized, “The results revealed an information paradox: Less can be more. Participants who received information once every five years, and could trade only that often, earned returns that were more than twice those of participants who were updated monthly and could trade that frequently.”
This isn’t to say that investors should remain blissfully ignorant about investment trends and their own finances. It does show, however, that having frequent access to a glut of information does not necessarily result in better decision making. For that reason, we advocate meeting with you at least annually to review your circumstances and progress toward your financial goals. We also recommend being selective about the information you gather. And feel free to contact your personal financial advisor, Jordan, any time you have a question at 303-741-9772, email him at Jordan@JordanDechtman.com or visit our website at www.JordanDechtman.com.