Tuning out the Noise

When you focus on an important goal, other people’s opinions can be distracting, even derailing. Who cares if a friend doesn’t agree with your new exercise plan, as long as it’s working for you? Once you’ve done the research and come up with a road map for success, rally your supporters and turn down the volume on your detractors.

This mindset is also key to being a successful long-term investor. Many of us are exposed to a barrage of investment commentary—for example, TV pundits handing out stock tips and friends touting the “next big investment.” As tempting as the ideas may sound, they’re potentially harmful distractions. Things that seem too good to be true usually are—and yielding to your “fear of missing out” can exact a deep price in the form of lower returns over a lifetime.

We all know that markets rise and fall—so we can be disappointed by downturns, but we shouldn’t be surprised by them. Reacting emotionally to recent market volatility may be more detrimental to your portfolio performance than the drawdown itself.

How do you tune out the noise? Working with a financial advisor, like working with a trainer or coach, can help you see past the headlines to cultivate discipline and the sense of security that comes from knowing you have a well-thought-out plan.

Extract from Dimensional Fund Advisors Ltd ‘You Know More about Investing than You Think You Do’ October 2023.

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