A new study published in the Journal of Consumer Research finds that investors who discuss their investment decisions with friends and family are less overconfident than those who go it alone. This is because sharing ideas with loved ones encourages a reality check, helping to calibrate confidence levels with actual expertise.
With the barriers to investing reduced to zero , the same innovations that might help more people invest might also inspire investor overconfidence that leads to lower lifetime returns. And it turns out that our financial decisions might benefit more from a friendly chat than from expert advice alone.published in the Journal of Consumer Research, investors who make decisions with others are significantly less overconfident than lone wolves.
Emotional connection: Seek an adviser who can connect with you on a personal level, not just someone with a slick sales pitch who sees you as a number on the way to meeting a sales quota. Uses relatable language: Your adviser should explain concepts in simple, everyday terms, just like a friend would, and not steamroll you with industry jargon.
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