Financial Porn: Are you Susceptible?

 

February 7, 2014 

 

 

Curiosity is a gift. It enables us to learn, explore and grow.  So let’s be honest: How many of us have had our curiosity aroused by financial media who make breathless investment predictions and promises that sound like they came straight from Merlin’s crystal ball?

 

We thought so. We’re human, too.

 

But a word of caution: While financial media prognostication and investment advice are not always wrong, they often fall into the category of “financial porn.” Emmy-winning personal finance commentator and journalist Jane Bryant Quinn coined that term to describe “sensationalist reports of financial news and products causing irrational buying that can be detrimental to investors' financial health.1

 

Yes, nothing fills 24/7 media space better than financial-entertainment personalities who know nothing about you but everything about how to sensationalize and grab attention.

 

Not only do they not know your unique financial picture or your goals; they don’t want to. Their job is to increase ratings and sell ads. That’s why it’s so important to sift the gold from the sand; or, in other words, to seek objective wisdom from someone who understands your situation and is driven by your best interests.

 

Here are three ways to gauge your vulnerability to financial porn – followed by three ways to resist the temptation and stay on a sound investment course:

 

You may be susceptible to financial porn if you:

  • Feel drawn to an investment opportunity that has a “need to act now” deadline;
  • Act or have acted on a tip from a friend or financial media personality without first considering how the change will affect your overall portfolio;
  • Tend to act first and research later.  Impulse buying has no place in an investment portfolio.

However, you will stay on course if you:

  • Develop a financial plan and investment strategy based on your long-term goals;
  • Stick to that plan, adjusting only when and if you experience changes in retirement objectives, marital status, business ownership, legacy considerations, etc.;
  • Check your pulse when considering an investment change: Are you being driven by changes in your long-term goals, or by the fear of missing out on something?

Winning in our financial lives is something we all want to do. But financial porn is to a healthy advisory relationship what pornography is to a healthy loving relationship. The next time you’re presented with a seemingly captivating opportunity from a financial media personality, ask: Who’s winning here? The one selling to you, or you?

 

Remember: It only takes two letters – “o” and “r” – to turn “plan” into “porn.”

 

The professional team at PARTNERSINWEALTH  will help you keep your long-term goals on course by serving as a source of information and sounding board for ideas, opportunities and challenges affecting your overall financial life. For more information, helpful guidance or professional assistance with your financial big picture, please contact Jim Waters, CFP®, at PARTNERSINWEALTH 713.964.4028 or jrw@partnersinwealth.com.

 

 

(1Source: Investopedia-financial dictionary)