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Self-control strategies

David S Meyers CFP
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      12-27-2011, 07:40 PM

Saw the following, relating the results found in a report
by Barclay's Wealth. (Text below copied from a blog
posting about it - the report itself may be found here:

What caught my attention was Strategy #1, which I'v seen other
folks post about in other contexts as well. It just seems to
me to be an *terrible* strategy. It's up there with the idea
of buying load mutual funds as a way to trick yourself into not
trading frequently because of the costs - it's just a bad idea.

(There may be other reasons to buy illiquid investments - perhaps
the best is if it's intended to be a very long-term holding and
the illiquid nature leads to great low-price opportunities to buy
from someone who is under pressure to sell)

The others are mostly pretty good strategies. I especially like
#3 and #5 - rules and cooling-off-periods. The example of a rule
they provide may actually be controversial (ie. to a total-return
portfolio management style), but the idea of rules - a system -
is great.


The report identified seven self-control strategies to help people
counter their tendencies to make bad financial decisions:

1. Limit the options. Purchase illiquid investments to avoid the
urge to sell investments when the market is falling.

2. Avoidance. Avoid information about how the market or portfolio
is performing in order to stick to a long-term investment

3. Rules. Establish and use rules to help make better financial
decisions, such as spend only out of income and never out of

4. Deadlines. Set financial deadlines. For example, aim to save a
certain amount of money by the end of the year.

5. Cool off. Wait a few days after making a big financial decision
before executing it.

6. Delegation. Delegate financial decisions to others, such as
allowing an investment adviser to manage your portfolio.

7. Other people. Use other people to help reach financial goals.
An example would be meeting with a financial adviser to make
and execute a financial plan.

David S. Meyers, CFP(R)
disclaimer: for educational purposes only. This is not financial advice.

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