Ep 18: How Overconfidence in Your Finances Can Lead to Destruction

Overconfidence in your financial life can sometimes lead to destruction. Let’s look at a few examples.

On this episode of The Retirement Huddle podcast, Mark Howard explains how overconfidence in your financial life can sometimes lead to destruction. Here are a few examples:

Overconfidence in the stock market or your ability to manage it in your portfolio

We have a lot of people who come in and they’re very proud of what they’ve saved. And they should be proud because they’ve done the hard part.

At the same time, they’ve had the blessing of a 401k, they got a company match and a market with tremendous gains over the last 10 years. You didn’t have to be brilliant to have done well.

A buy-and-hold mentality and stock trading and picking mentality and an accumulation mindset is not what’s going to get you through retirement. We’ve got to talk about distribution.

Overconfidence in a certain amount of money

Some people think they can retire comfortably when they get to $1 million, but that’s not necessarily true. It’s not about a number.

Everybody’s situation is different. It’s about a plan and having your portfolio structured so all your essential bills are covered for the rest of your life.

Overconfidence in rules of thumb

Wall Street’s done a great job of brainwashing us with some of these problematic “rules of thumb,” such as:

  • I can withdraw 4% of my savings each year and be just fine.
  • When the market goes down, don’t worry about it. It’s just a paper loss.
  • Don’t worry, you’re in it for the long haul.

We want absolute certainty that our plan will work for you.

Overconfidence in your own understanding of how certain products work

Even something like mutual funds, a lot of people don’t realize the internal fees that mutual funds have. Rarely do people know what their fee structure is with variable annuities.

“There’s so many misnomers out there and there’s so many things people are not aware of,” said Mark. “When we sit down with anybody, a lot of people walk away a little more educated.

Listen to the full episode to hear about overconfidence in your own decision-making process. Thanks for listening! We’ll be back for another show every other Thursday.

Today’s Rundown:

[1:06] – Overconfidence in the stock market or your ability to manage your portfolio

[2:49] – Overconfidence in a certain amount of money

[5:05] – Overconfidence in rules of thumb

[6:47] – Overconfidence in your own understanding of how certain products work

[8:45] – Overconfidence in your own decision-making process

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Show Hosts

The “Coach” who will help you achieve a successful retirement future and the radio veteran who brings it all together.

Mark Howard - The Coach

Mark Howard is the President of Howard Financial Group and has more than 27 years of experience in the insurance, wealth management and financial services industry. He's also the host of the Retirement Huddle Podcast and radio show on 97.7 WTKS.

Ron Stutts - The Voice

Ron Stutts has been a professional communicator for more than 40 years. With a successful radio career that spans decades, Ron's voice has been heard on dozens of radio stations and podcasts across the country.

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