Are You An Optimist?

By: Steven L. Schou, CFP®, AWMA®, Vice President Business Development & Wealth Advisor

When thinking about your investment and financial life, are you an optimist, a pessimist, or an optimistic realist and what is the difference?  In my opinion, an optimist is a person who views a glass as always half full and is always looking for the next bull market.  Being an eternal optimist can be a real plus, but if they bury their head in the sand when it comes to their money and they are taking a more aggressive investment strategy, they could experience some severe account swings.  This would not be a problem if they have the emotional fortitude to maintain their investment strategy like the optimistic realist.

 An eternal pessimist believes that the glass is always half empty and is always fearful of the next market drop.  This personality tends to be too conservatively invested based on their goals and age because of continuous short term market concerns.  Both perspectives can affect the financial goals of the average investor in either a positive or negative way based on their investment objectives and time lines. 

Finally, what is an optimistic realist?  Optimistic realists believe that the glass is always refillable and they tend to believe more in balance, in their lives and with their money.   They realize that markets will go up and down in the short term, but over the long-term the markets will continue to rise. Typically, an optimistic realist would tend to take a more balanced long term investment approach with their money and not worry about short term market noise.  They realize that in the short term there are too many unknowns, but over the long term the results are much more defined.

Why does any of this matter?  The investment strategies that you choose at different times in your life will have an impact on your results regardless of the short term market volatility.  It goes back to your emotions and your money which is both extremely interconnected and has a tremendous impact on the goals that are actually accomplished.

Seeking guidance from a financial professional with seasoned experience can make a tremendous difference in your final results and they may help talk you off the financial ledge at different points in your investing life.  Work to minimize the mistakes and maximize the results!

 

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