Category: Anchor Lines/Winter 2011

23 Mar

Don’t Let Emotions Drive Your Investment Decisions

by marketing in Anchor Lines/Winter 2011
Content developed by CUNA Brokerage Services, provided by Jeffrey C. Hamm, CRPC®

Emotions play an important role in some of the most important decisions we make, such as the person we choose to marry, the friends we choose to spend time with, or the home we choose to buy. But
when it comes to investing, emotions can do more damage than good. Here are three ways that emotions play a detrimental role in our investment decisions and what we can do about it:

Don’t Follow the Herd

When stock prices start to fall, it isn’t uncommon for some individuals to sell their stock mutual funds. However, what starts as a few people selling their investments can quickly turn into a panic, where everyone decides to sell. Why are they selling their investments? Because “everyone else is doing it.” All of a sudden, people are making important investment decisions based on what other people are doing. It’s called “herding” and it is one of the most common mistakes that people make when markets decline.

Avoid Extreme Thinking

When markets fall, people often start to think in extremes. Everything in the market begins to look black and white. Instead of asking questions about why the market is falling, they assume
that all news is bad news and that stocks will continue to fall. There is no gray in the mind of someone thinking in extremes. It’s difficult to break free from this kind of thinking. The result is that decisions are based less on facts and more on exaggerated interpretations of the facts. The challenge is to remember that the world of investing is rarely black and white. The facts can have many meanings, and we need to think intelligently about how these facts affect us before we make any investment decisions.

Be Aware of Our Short-Term Bias

When it comes to investing, most of us have a short-term bias. Recent history has a disproportionate impact on our future expectations. All things being equal, recent memories are given more weight than distant memories. That means that recent market gains lead to excitement and higher expectations. On the other hand, recent market losses lead to suspicion and caution. The challenge for investors is not to forget both the long-term history of the markets and their own long-term goals.

Stay True to Your Goals and Your Plan

When markets are volatile, it tends to bring out our emotional side. Most of these emotions lead us down paths that result in poor investment decisions. While it might seem easy to dismiss the role of our emotions during times like these, the power of emotions can quickly overshadow a more logical approach to investment decisions.

The key for investors is to stay focused on the long term. Before we react emotionally to short-term market gyrations, we should ask ourselves some important questions. What is our long-term
goal? Have our goals changed? Was our plan to reach our goals a sound plan? Are there any good reasons to abandon our plan? Once we have asked and answered these questions our decisions are more likely to be driven by logic, not emotions.

Jeffrey C. Hamm is a Financial Advisor with the Navigator Financial Planning Services Program located at Navigator Credit Union. If you have any questions, or would like to provide feedback, regarding the information presented in this article, you may contact Jeff at 228-474-3427.

Representative is not a tax advisor or legal expert. For information regarding specific tax situations, please contact a tax professional. For legal advice, consult an attorney.
Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free (866) 512-6109.

Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution.

CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. FR061007-CEAE
23 Feb

Are You Coupon Crazy?

by marketing in Anchor Lines/Winter 2011

Everyone loves getting a good deal. Now bargain shopping is easier than ever with group deal sites like Groupon® and LivingSocial, and other coupon sites offering databases of coupons and even tutorials on extreme couponing. But make sure your zeal for finding a deal doesn’t have you spending more than you save.

Frugal or Frenzied?

If you’re spending money on products or services you normally wouldn’t buy or can’t use, you’re losing money no matter how deep the discount. Following are some tips for making sure the bargain you’re hunting isn’t circling back to bite you.

  • Beware of BOGO. Buy one get one free deals seem like a steal, but if you end up with more than you need or can use, you’ve helped the store move product without helping yourself.
  • Look into location. If you purchase a voucher for a shop across town or have to go to three stores to use all the coupons you’ve clipped, your gas usage will likely undercut your savings.
  • Focus on the fine print. Coupons purchased through group deal sites may offer half off or better on various products and services, but restrictions often dictate when they can be redeemed or tie the savings to other purchases. Make sure you know what you’re getting and that it fits with your schedule before you pay for the deal.
  • Mistrust the mob mentality. The excitement of getting in on a good deal can cloud your reasoning. Take a deep breath and think about whether you really need the product or service offered before you spend to save.
  • Eye the expiration date. A coupon purchased but not used before it expires is money wasted.
  • Be conscientious about your credit. Buying your bargains with a credit card won’t be much of a deal if you fail to pay off the balance and allow the interest to add up.

Coupons and group deals can be a savvy way to save money. Just keep in mind that when you buy a bargain, you’ve still spent money. You only win if you’ve spent less for what you needed to buy anyway.

Save ‘N Up

With the Navigator Credit Union Save ‘N Up Debit Card, you’ll save as you spend—with no coupons required! No matter how you choose to use your Navigator Credit Union debit card—to buy lunch, gas, coffee, groceries, or just about anything you want—your purchase will be automatically rounded up. With every transaction you complete, the difference between your purchase total and the nearest whole dollar amount will be transferred from your Checking Account to your high-interest Save’N Up account. Go to www.savenup.com to learn more.

THRIFTY MEASURES THAT REALLY PAY OFF

You don’t have to be a bargain-hunter extraordinaire to save yourself money. Here are a few sure-fire ways to cut spending without clipping any coupons.

  1. Visit your local library for free books, movies, music and magazines.
  2. Don’t miss deadlines for returning rented movies and pay off credit cards or other bills on time to save yourself late fees and added interest.
  3. Comparison shop by looking at cost per pound, ounce or other unit of measurement to determine which products are the best deals.
  4. Avoid impulse shopping by taking the time to know what you want and what you’ll actually use, read reviews online and scout good deals. Then sleep on it before you make your purchase!
  5. Dine in rather than going out and bring your lunch from home during the work week, and you may save more than $1,000 over a year.