Joe Duran, head of Goldman Sachs Personal Financial Management in the US, says ” The biggest mistake investors tend to make is “your time perspective and your emotional biases … cloud your decision-making,” according to Duran.
As humans, “we are naturally drawn into what we’re experiencing right now and feel the need to act … because every financial decision is emotional” and “every investment decision is a conflict between the fear of losing out and the fear of losing money,” he noted, likening it to a “tug of war.”
However, “the minute you’re feeling emotional, your decisions are going to be almost the opposite of exactly what you should be doing when it comes to investing,” he warned.
It is important to step back and have an advisor provide “a sense of perspective on time and priorities,” he noted.
Clients must understand that investment decisions that look good today “can also go bad,” he explained, so it’s important to ask whether it is worth making a decision that can significantly impact the wealth they have built. One thing to keep in mind: “The pain of losing is much worse than the enjoyment of gaining.”
Joe Durans talks here about 9 Ways to Help Clients Live Richly Instead of Dying Rich