You and I both know people who went to a certain college, or into a certain profession, because that’s what they did in their family. (“Grandpa was a doctor, I am a doctor, and you’ll be a doctor one day.”)
And we know people who decided they had to get married in their 20’s because all their friends were getting married in their 20’s.
And we know people who do all kinds of things, not because they want to, but because they want to fit in, or be accepted, or even loved.
(To remind me of this, I have a plaque hanging on the wall that says “Why fit in when you were born to stand out?”)
Following the crowd is what the experts call a “herd mentality.”
This herd mentality can lead to disasters.
When it comes to investing your money, most people left to their own devices buy when the market is high and sell when the market is low. (pssst — not good!)
You’ve heard the saying, “buy low, sell high,” yet most people who invest money on their own do the opposite and that spells disaster.
According to Dalbar’s Quantitative Analysis Of Investor Behavior report from 2014, the “20-year annualized S&P return was 9.85% while the 20-year annualized return for the average equity mutual fund investor was only 5.19%, a gap of 4.66%.”
As they state on their website they attribute this huge gap to several things, but one of the biggest reasons is the herd mentality.
This is one of the most compelling reasons there is to hire a professional investment advisor who is a fiduciary. If they truly have your best interests at heart, they won’t let you sell low and buy high and over 20 years, if you averaged a 4.66% higher return each of those years, that would mean a lot more money in your pocket.
Wouldn’t you rather average 9.85% per year vs. 5.19% per year?
No matter whether it’s with your money, your career or your life, your greatest success comes when you follow your heart and your intuition, and not the herd.
It’s human nature to want to follow the herd, but you can fight these tendencies by doing some soul searching and discovering what you REALLY want out of life, or hiring professional advisors and coaches who are not part of your herd that can help you search out the truth — the truth for you, that is!
Trust me on this one, I wouldn’t be where I am today without bucking a few trends, trusting my intuition, and having the support of some great coaches who helped me sift through the rubble of my life from time to time and clarify what it was that I really wanted me life to look like.
And once I figured out what I wanted my life to look like, the financial part became easy. That’s not to say I didn’t work hard along the way, but by not following the herd, and practicing what I preach, I’m able to live in a home I love, doing work that I love, with people that I love. What could be better than that?
Now…..off to design that that new kitchen and the in-ground pool, because soon there will be a little construction action going on around here.