13 Experts on Investor Frictions
I've asked some insightful minds to answer a couple questions for readers.
For the average person, what's the biggest friction to achieving a successful, long-term investment experience?
What’s one action that investors can take to overcome that friction?
I've learned so much from these people over the years.
I hope you will, too.
OUTSIDE VOICES
Emily Guy Birken
BIGGEST FRICTION
Intimidation leads to analysis paralysis, so people put off investing.
OVERCOMING IT
Start small. Racking up some wins helps overcome the intimidation factor.
Robin Wigglesworth
Global Finance Correspondent, Financial Times
Author of Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever
BIGGEST FRICTION
Paying people who are trying to line their own pockets more than they are trying to fill yours.
OVERCOMING IT
Assemble a cheap, diversified investment portfolio and don't get cute about trying to time markets.
Dr. David Rhoiney
Entrepreneur, Financial Literacy & Independence Advocate, Surgeon, Blogger
BIGGEST FRICTION
Knowledge and FOMO.
OVERCOMING IT
Start with low risk and with time & experience add riskier positions.
Conor Feldmann
Portfolio Manager @ Truepoint Wealth & Commas, Blogger
BIGGEST FRICTION
Impatience. You must avoid meddling and wait decades. It’s hard and boring.
OVERCOMING IT
Automate contributions into a diversified portfolio; never check performance.
Bryan Lubwama
Director at KKR & Co. Inc.
BIGGEST FRICTION
Discipline - do the right thing.
OVERCOMING IT
Have a plan, follow it.
Manisha Thakor
Founder of MoneyZen, Financial Literacy Advocate
Author of On My Own Two Feet
BIGGEST FRICTION
Not starting early enough to truly benefit from compounding.
OVERCOMING IT
Start contributing (more) to your 401k/403b or an IRA today.
Peter Lazaroff
Author of Making Money Simple
BIGGEST FRICTION
Their own cognitive and emotional errors.
OVERCOMING IT
Hire a financial advisor.
Morgan Housel
Partner @ Collaborative Fund, Blogger
Author of The Psychology of Money
BIGGEST FRICTION
Not understanding that the long run is a series of crazy short runs that you have to endure.
OVERCOMING IT
Have more room for error in your finances. Most don't have enough.
Taylor Schulte
Founder of Define Financial, co-Founder of Advisor Growth Community
Host of the Stay Wealthy Podcast
BIGGEST FRICTION
Doing something (i.e., making investment changes) instead of just standing there. #JohnBogle
OVERCOMING IT
Read Morgan Housel's book, The Psychology of Money. Every year.
Kristin McKenna
Managing Director @ Darrow Wealth Management, Senior Contributor @ Forbes
BIGGEST FRICTION
Making decisions based on recent events or short-term expectations.
OVERCOMING IT
Investing builds wealth, don’t let trading erode it.
Phil Huber
Chief Investment Officer @ Savant Wealth, Blogger
Author of The Allocator's Edge
BIGGEST FRICTION
The inability to distinguish between the interesting and the actionable.
OVERCOMING IT
Find trusted filters.
Rodrigo Cancela
Director @ Nantas - Asesores de Inversión, Blogger
BIGGEST FRICTION
Thinking complexity + movement is necessary. It's not.
OVERCOMING IT
Theoretically, learn the evidence of investing. Honestly, hire an advisor.
Cameron Passmore
Executive Chairman & Portfolio Manager @ PWL Capital
Host of the Rational Reminder Podcast
BIGGEST FRICTION
Not knowing why they are investing, or when they have enough.
OVERCOMING IT
Have a plan based on living a good life now and in the future.
End.