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How to unlearn what you know about money

Vanessa Stoykov  |  12 Oct 2017Text size  Decrease  Increase  |  
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This is the first article from our new contributor, Vanessa Stoykov. Learn more about Vanessa, the Nine Network Show her company created, and the Morningstar companion guide to the show.

 

As the creator of No More Practice and founder of our production house, evolution media group, I have long seen the challenges of a technical industry, like financial services, in finding a commonality and way of communicating with people that is interesting, short-form, and easy to digest.

I have also seen the challenges people, myself included, have around knowing what to do to build their wealth for the long term, while paying for the necessities along the way, and having some fun.

By spending the last 23 years in financial services, I have had the opportunity to learn from some of the sharpest minds around money and investing. To get the best out of this knowledge, I came to the realisation that I had to unlearn a lot of things I thought I knew.

As a new contributor to Morningstar, I will be sharing my journey with you--about what I needed to unlearn about money to really grow my wealth. I will also be talking to interesting people from all walks of life about what they had to unlearn to get where they are today.

This week's lesson covers availability bias, which really means believing the information you have at hand--even if it's not the right information to make a decision upon.

This is as true in life, as it is in investing. However, with the advent of the media and its sensationalised version of events, I do believe it has become harder to ignore the information.

I remember watching the news around the time the GFC was happening and my heart rate increasing as it really felt as if the world was ending. So too when Trump was elected.

However, it wasn't, and it didn't. If you believe the alarmist information at hand you may never truly invest for the long term again.

So how do you cut out the noise, and stay focussed on the bigger picture?

For a start, I believe in setting a strategy with a quality financial adviser--one that lasts the distance of your long-term financial goals. You need to understand the strategy and more importantly, stick to it.

That's it. Don't question it, regret it, or second guess it. If you believe in the ability of that strategy to create the long-term wealth you need, then hold steady.

Sounds easy, right? But it's harder than it sounds. Staying the course is like sailing the ocean--it's never all smooth seas.

I have gotten to the point where I ignore large chunks of the news. Not because I don't care, rather because I care a lot.

Don't believe what everyone is saying. Get great advice and stick to your strategy. Cutting out the noise, and deciding not to waste emotional energy on worrying about the day to day, is a classic lesson to unlearn.

While it's not the only one, in this day and age, it's a big one.

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Vanessa is the founder and chief executive of evolution media group. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.

© 2017 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

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