Lesson 2. The Investment Jungle
Today we are inundated with financial news and analysis via TV, newspapers, magazines, websites, books, podcasts, etc; and we have countless investment choices–e.g., stocks, bonds, REITS, Mutual Funds, commodities, MLPs, etc. The situation can be overwhelming and may lead to a state of mind which psychologists call information overload and/or choice overload. As a result investors may:
(1) Become paralyzed by indecision and end up doing nothing.
(2) Adopt a brand loyalty mentality in which they simply stick with the financial adviser and/or investment products they’ve always been using.
(3) Become vulnerable to a slick salesperson or advertising campaign that promises unrealistic results.
All of these behaviors can be detrimental to the performance of an investor’s portfolio.
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