Understanding investment compatibility

Investment compatibility becomes a possibility when you first admit that investing triggers difficult emotions. Try this series of questions and see if you relate to any part of the emotional dilemma:

• Have you ever found yourself losing sleep over the market, angry with your broker, unsatisfied with your returns, yet unable to pull out of the market?
• Are you jealous of your business associate who has turned it all over to a money manager and has no idea how he is doing?
• Does the woman across the street with her string of singlefamily houses irritate you?
• How did you react when that 35-year-old coworker retired?
• Do you value honesty yet find you have lied to several people about your investments and investment returns?
• Do you seek serenity over financial security?
• Will high returns bring you serenity or just increase your craving for more high returns?

The more you look at it, the more emotionally charged investing becomes. Financial advisors discuss risk as risk of losing money. Isn’t the real risk emotional? If you are not in the stock market, you risk being an outcast at the beach gatherings this summer. But if you are in the market, you risk losing sleep and losing time trying to keep up with how you are doing, how the market is doing, and how well everyone else is doing compared to how you are doing.
If you knew yourself better and knew more about the emotional aspects of different investments, investing would be more satisfying. Try this question. Is it easiest for you to trust people, financial markets, or the U.S. Treasury?
Those who have a hard time trusting people will find that turning their assets over to a money manager or a stockbroker creates fear. Many independent business people founded and built up their own businesses because they only really trust themselves. That is fine. If you are like that, yet you have turned your money over to a money manager, you will be uncomfortable even if the money manager produces outstanding financial results. You will be happier making all your own investment decisions even if it costs you money.
Some people cannot trust financial markets. Perhaps you saw your parents lose a fortune in stocks. In that case, you may be more comfortable receiving interest payments from Treasury bonds, even if you could make more money in stocks.