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Mind over Money

Mind over Money

Our financial thoughts and behaviors are often at odds with our goals. Here’s how to bring them into better alignment.

Have you ever spent money you should have saved? Sold an investment you should have kept? Or made other decisions not in your best financial interests?

You aren’t alone.


Key Takeaways

 

“... take a step back and think about your values when it comes to money.”

 

MICHAEL LIERSCH,  PHD

Global Head of Wealth Planning & Advice, J.P. Morgan

We can’t always change our most deep-rooted behaviors, but we can understand them, manage them and build our financial plans around them. “First, take a step back and think about your values when it comes to money,” suggests Liersch. “What matters most to you? Are your behaviors consistent with those values? Are they moving you closer to your goals? If not, even small changes can make a big difference.”


Compounding is confounding: we don’t grasp how money grows

When asked how much $400 monthly investments would grow over 40 years at 10% annual returns, the average person estimated more than $2 million less than actual growth.

Compounding is confounding: we don’t grasp how money grows

Source: Misunderstanding Savings Growth: Implications for Retirement Savings Behavior, Craig R. M. McKenzie and Michael J. Liersch, March 2011

Five Strategies for Managing Your Financial Behaviors
1.
Be the architect of your financial life
2.
Reframe your financial decisions
3.
Align your behaviors—and Investments—with your goals
Stay the course
6%
4.
Find a trusted person to collaborate with
5.
Start with very small, achievable goals

 

The coin flip decision: which would you choose?

Heads you win, tails you lose. Would you take the risk or avoid it?

The coin flip decision: which would you choose?

Source: Risk Tolerance and Decision Making, Michael J. Liersch, PhD, and Riley O. Etheridge, CFA®, CFP®, March/April 2015

You’re Only Human: Do You Recognize Any of These Common Behaviors?
Get a Glimpse Into Our Planning Process
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Next Steps: Put These Ideas Into Action
Follow three simple steps to get started:
Access our expertise. Talk with a J.P. Morgan Private Client Advisor about creating a Customized Financial Analysis* that reflects your unique needs and behaviors.
Learn more. Read  Start Early, Save Less: The Power of Compounding for practical tips on getting—and staying—invested for the long term.

 

*The Customized Financial Analysis referenced is a tool that provides an additional resource in the evaluation of the potential risks and returns of investment choices. The projections or other information generated by the Customized Financial Analysis regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results.

 

The information within this document is being provided for informational and educational purposes only. It is not intended to provide specific advice or recommendations for any individual. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult the appropriate financial professional.


JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal and accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.

Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.

Investment products and services are offered through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member of FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMS, CIA and JPMorgan Chase Bank, N.A. are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.


© 2019 JPMorgan Chase & Co.

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