Retirement Answer Man #251 - Behave Yourself: An Interview with Dan Crosby, Author of The Behavioral Investor
Welcome to the Retirement Answer Man show. On episode 251 we discuss what you can do to battle Alzheimer’s in the Hot Topic segment and Dan Crosby joins me to discuss behavioral investing in the Practical Planning segment. This is the podcast dedicated to helping not just survive retirement, but rock retirement! One way to really rock retirement is to surround yourself with people that are in the same boat. If you are surrounded by people that are motivated and intentional and working toward the same goal then that is a great way to ensure that you will rock your retirement. Join the Rock Retirement Club waitlist to arm yourself with the best retirement resources and community.
What can you do to keep Alzheimer’s at bay?Increasing longevity is a scientific marvel. While it is exciting that people are living longer and longer, longevity can be a source of worry as well. Alzheimer’s disease is now battling heart disease for the rank of the top killer of the elderly. One way that you can combat this scary disease is to keep learning. People that are continually learning are exercising their mental muscles. Work is another fantastic way to keep the mind active. Work actually creates a type of cross-training for your brain. Find out why work could be just what the doctor ordered to combat Alzheimer’s disease on the Hot Topic segment.
Why don’t we talk about the behavioral aspects of investing?People are always discussing active vs. passive investment strategies, but no one ever brings up the behavioral side of investing. Making better financial decisions depends on much more than just whether one is passively or actively investing. Behavioral investing actually requires something more from people. You have to stop and consider how your behaviors really affect your choices. Debating passive vs. active is a much easier debate. Considering investor behavior requires sacrifice and introspection. Listen to Dan Crosby describe why it is not easy for us as humans to change our behaviors even when it’s for the best.
What are the 4 tendencies that impact investor behavior?There are 4 tendencies that impact investor behavior. They are conservatism, attention, emotion bias, and ego. Conservatism is an overreliance on the status quo. We as humans love to stick with the way things already are. Attention means that we tend to confuse sensationalism and the lure of the improbable with the probable. Emotion bias means we think that things that we like must be safe. Ego means that we have a tendency to be overconfident. We think that we are smarter than we are, and we think that we are luckier than we are and we also think that we can be more precise than we actually can. Find out why intelligence is not a factor in good investing.
The decumulation phase of investing is the least understoodPending retirement means you are going from the accumulation phase of investing into the decumulation phase. This can be a scary and disempowering feeling to go from saving to withdrawing assets. Not only that, but retirees entire life purposes are changing and they are no longer generating income. This shift in mindset can cause people to feel out of control. Dan feels that you have to be just as diligent as putting your psychological realities in order as your finances. Discover how the PERMA model for happiness can help you prepare for the psychological realities of retiring by listening to Dan Crosby on the Retirement Answer Man show.
OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT- [3:21] Alzheimers and longevity can be scary thoughts
- [4:45] What can you do to lessen your chances of Alzheimer's
- [8:17] Dr. Dan Crosby is here to discuss the behavioral aspects of investing
- [10:05] Why don’t we talk about behavioral aspects of investing enough?
- [14:14] The 4 tendencies that impact investor behavior
- [21:55] The decumulation phase is the least understood
- [24:46] The PERMA model for happiness
- [29:24] Acknowledge that stress can cause a temporary decrease in intelligence
- [31:08] Go check out Dan Crosby’s book, The Behavioral Investor
BOOK - The Behavioral Investor by Dan Crosby
BOOK - The Laws of Wealth by Dan Crosby
Roger’s YouTube Channel - Roger That
BOOK - Rock Retirement by Roger Whitney
3-video Series: 5 Minute Retirement Makeover
Roger’s Retirement Learning Center
The Retirement Answer Man Facebook Page