How Your Personality Can Affect Your Investment Performance – Presented by Mark K. Lund, Financial Advisor in Utah

Financial Advisor Utah

There are some people who would love it if you threw a surprise birthday party for them. They’d enjoy every aspect of it, from the sudden yell of “Surprise!” to being the center of attention to eating cake with a large group of friends.

On the other hand, there are people who think that a surprise party in their honor would be the very opposite of enjoyable. They don’t like unplanned surprises. They don’t want a roomful of people looking at them. And what if the cake wasn’t the kind they liked?

Same event. Two widely divergent experiences. People with different personalities will look at identical circumstances with completely different perceptions. So, it’s not a stretch to say that those same personality differences will play a role in how they make financial decisions—how they perceive risk and reward and how they judge whether or not an investment is good.

Recently, a team of researchers from three universities were able to demonstrate a strong correlation between people’s personality traits and their behaviors as investors.1 They did this through a survey of 3,325 U.S. investors and were able to confirm their findings by comparing their results with several similar studies done in Europe.

According to psychology, each of us has varying degrees of the Big Five personality traits: Extroversion, Agreeableness, Openness, Conscientiousness, and Neuroticism. The researchers found that when it comes to financial decision making, several combinations of these traits had an effect on investing behavior.

For example, people with high conscientiousness and extroversion tend to expect a lower probability of a market crash and, as a result, tend to be more willing to make riskier investments.

On the other hand, people with high neuroticism perceive the market as much more risky and are more comfortable with less volatile investments that feel “safer.”

People with high openness and low neuroticism are open to the idea that the market could go up or down, but feeling this risk is appropriate, are likely to invest in stocks and stock funds.

Interestingly, both extraverts and neurotics like to get investing advice from people around them. The first, because comparing strategies is a social interaction. The second, because they have a fear of missing out.

Regardless of how you perceive the market, making investment decisions based on over-optimism or dire pessimism can negatively affect your long-term returns.

A trusted financial advisor takes into account your personal risk tolerance, along with your unique financial situation, and goals. And when strong emotions threaten to sway your investing decisions, they can also give you valuable, objective insights to help you progress along a plan with the best chance of attaining your desired outcomes.

If you ever have any questions about your investments or retirement plans, please feel free to give me a call at 801-545-0696.

Mark Lund
Stonecreek Wealth Advisors, Inc.
11576 S State Street, Bldg. 1002
Draper, UT 84020


Disclosure:This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. All economic and performance data is historical and not indicative of future results. Market indices discussed are unmanaged. Investors cannot invest in unmanaged indices. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This material was prepared by Efficient Advisors, LLC (“EA’) for Mark Lund, Mark is a Financial Advisor in Utah. He is known as a Wealth Advisor, The 401k Advisor, Investor Coach, Financial Planner, Investment Advisor and author of The Effective Investor. Mark offers investment advisory services through Stonecreek Wealth Advisors, Inc. a fiduciary, independent, fee-only, Registered Investment Advisor firm providing investment management and retirement planning for individuals and 401k consulting for small businesses. Mark’s newsletter is called The Effective Investor Newsletter. Cities served in Utah are: Salt Lake City, Salt Lake County, Utah County, Park City, Murray City, West Jordan City, Sandy City, Draper City, South Jordan City, Provo City, Orem City, Lehi City, Highland City, Alpine City, American Fork City. The views expressed herein are exclusively those of Efficient Advisors, LLC (‘EA’), and are not meant as investment advice and are subject to change. All charts and graphs are presented for informational and analytical purposes only. No chart or graph is intended to be used as a guide to investing. EA portfolios may contain specific securities that have been mentioned herein. EA makes no claim as to the suitability of these securities. Past performance is not a guarantee of future performance. Information contained herein is derived from sources we believe to be reliable, however, we do not represent that this information is complete or accurate and it should not be relied upon as such. All opinions expressed herein are subject to change without notice. This information is prepared for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. You should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. You should note that security values may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Investing in any security involves certain systematic risks including, but not limited to, market risk, interest-rate risk, inflation risk, and event risk. These risks are in addition to any unsystematic risks associated with particular investment styles or strategies.

Category: Blog, Newsletters

About the Author ()

Mark K. Lund is the author of The Effective Investor, a #1 Best Seller, and founder of Stonecreek Wealth Advisors, Inc. an independent, fee-only, Registered Investment Advisory firm. He has provided articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and, just to name a few.  Mark publishes two newsletters called, “The Mark Lund Growth Report” and “Mark Lund on Money.”  Mark provides CPE (continuing professional education) courses for CPAs.  You may also have seen him on KUTV Channel 2, or as a guest speaker at a local association or business. Mark provides investment and retirement planning services for individuals and 401(k) consulting for small businesses. In his book, The Effective Investor, Mark exposes the false narrative magazines, media, big Wall Street firms, and most advisors want you to believe. The good news is that Mark will show you that you don’t need their speculative ways of investing in order to be a successful investor. Get a free copy when you schedule your initial consultation.

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