The economy still seems to be on shaky ground, however, many believe that it is recovering and are starting to invest once again. By using exchange traded funds (ETFs) paired with a simple strategy for buying and selling, investors can check their emotions at the door.
Most investors know that they should let their emotions drive investment decisions, but unfortunately, it’s in our DNA.
Kent Grealish, FP and a partner in Quacera, a registered investment advisory firm in San Bruno, CA, for Index Universe states that we are psychologically hard-wired to buy high and sell low and that overconfidence, or the thought that one can outperform the market, can override all common sense no matter how much we know.
Grealish espouses the benefits of indexing as a strategy that can be used to control emotional decision making. Most ETFs track an index and don’t attempt to beat the market, thereby addressing those things that can be controlled, such as decision-making that’s based on emotions.