Purpose over profit: Setting Financial Goals (#127)

Financial Advisors Say The Darndest Things

Episode Summary: In this episode of "Financial Advisors Say The Darndest Things," AB Ridgeway, known as Mr. Christian Finance, explores the theme of control in investment decision-making. He delves into the psychological and technical aspects of control, addressing common biases, the role of emotions, and strategies for effective risk management. Through insightful commentary and practical guidance, Ridgeway empowers listeners to navigate financial markets with confidence and clarity, emphasizing the importance of understanding what can be controlled and what must be confronted.

Key Takeaways:

1. Understanding Control: Ridgeway begins by elucidating the concept of control, emphasizing its significance in financial decision-making. Drawing from insightful quotes, he highlights the distinction between what individuals can and cannot control in their financial lives, encouraging listeners to discern between the two and focus on actionable steps for better outcomes.
2. Control Bias: Exploring the phenomenon of control bias, Ridgeway reveals how individuals often overestimate their influence over financial outcomes, succumbing to irrational beliefs and behaviors. By illustrating parallels with gambling psychology, he underscores the importance of acknowledging limitations and seeking assistance to overcome misguided perceptions of control.
3. Controlling Your Investments: Ridgeway discusses common approaches to managing investments, ranging from hands-off approaches to micromanagement or reliance on financial advisors. He cautions against control bias-driven behaviors such as excessive monitoring or emotional reactions, advocating for a balanced approach rooted in strategic decision-making and prudent risk management.
4. Controlling Risk: Addressing the core of investment management, Ridgeway explores the relationship between risk and reward, urging listeners to assess and mitigate risks effectively. By distinguishing between controllable and uncontrollable risks, he empowers investors to focus on factors within their purview, such as diversification and portfolio construction, to optimize outcomes and minimize potential losses.
5. Controlling Your Emotions: Ridgeway concludes with a call to manage emotions during periods of market volatility, emphasizing the importance of maintaining composure and focusing on controllable aspects of financial planning. Through biblical wisdom and practical insights, he encourages listeners to cultivate an intelligent and informed approach to investing, rooted in knowledge and wise stewardship.

Quotes:

1. "Control what you can control, and confront the rest."
2. "If you can't control your emotions, you will never be able to control your money."
3. "An intelligent heart acquires knowledge, and the ear of the wise seeks knowledge."

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*Disclaimer: This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. This is strictly for information purposes. We recommend you speak with a professional financial advisor.