When it comes to our nest eggs, we all want to make the best decisions possible. Scouring sources of information often seems like a good place to start. And it can be — if you know how to sift through what you find.
A common question I’ve heard is, “What book, paper or website do you read to better understand retirement planning?” In this era of unprecedented access to data, information can be a tricky resource.
Books, blogs and news sites aim to explain varied aspects of investing, such as how options, stocks and even trading exchanges work. I refer to such content as resource information. Such fundamental core knowledge is largely timeless.
Other investment information is more subjective. Books exploring past market events are naturally mixed with facts as well as with author bias. Several books about the recent Great Recession, for instance, address the same historic happenings but draw dramatically different conclusions.
Guard against viewing one author’s opinion as the ultimate authority. If his or her premise is flawed or downright wrong, you might inadvertently jeopardize your nest egg.
No one can digest all of the information available online and on paper these days. As advisers and analysts, our team filters the flow of data, focusing on sources that we trust and verified over time.
What should you, the nonprofessional investor, read? Focus on building a process of investing, rather than accumulating data. In “The Millionaire Next Door,” a perennial bestseller among amateur investors, author Thomas J. Stanley studied individuals who bought and held stocks for many years or even decades. These individuals became rich buying and holding, not through trading.
Stanley failed to look at the poor folks who bought and held stocks that tanked. Next Door delivered a great tale and encouraged many to follow one path of investing success. A lot of copies sold.
Not everyone who buys and holds will win.
Regardless of the many contradictory sources and viewpoints tugging at your attention, your best strategy is develop and stick to a methodology of saving and investing. Above all, reading some of the daily avalanche of financial news and opinion must support your intentions to put money toward your long-term goals.
Joseph “Big Joe” Clark, a financial planner and managing partner of Financial Enhancement Group, writes for AdviceIQ.