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Information Overload Hurts Your Portfolio

Do you believe that you need the maximum information to make a good financial decision? Are you always checking the up-to-the-minute news on your favorite financial site? You could be doing harm to your portfolio.

Information overload is a modern day phenomenon. The Internet has changed the way we encounter and discover information. Today one is exposed to more information in a day than generations past experienced in a lifetime. One side effect of this vast quantity of information is information overload.

Information overload can impair your ability to process information and make good decisions. This is true for your financial life as well. More information does not mean better information. It can cause you to make poor portfolio moves as you react to changing information.

For example, the news may be bombarding you with the drop in oil prices. You may be hearing how Europe is headed for deflation. There may be speculation that it could spread to the rest of the world. Yet this may have nothing to do with your portfolio long term. All this news may cause you to make moves in your portfolio that decrease your returns. You may have been better off staying the course you had set.

Ever notice that financial articles and commentary often contradict each other. That is because much of it is based on opinion. There is nothing wrong with this contradiction. Much of investing is based on personal preference. But it can leave the reader very confused.

So what can you do? For one thing, consider what you want your money to accomplish. This provides a guide going forward. Your goal is not to beat the market. Your goal is not to have the best portfolio ever. Your goal is to meet your needs for now and the future.

Stop watching and reading so much financial news. Instead limit your financial sources. One, or two, reputable sources that meet your needs is enough.

Have a financial plan and stick to it. The simplest investments are two to three index funds that cover the markets with some cash set aside as a cushion. You really don't need all the fancy and complex investments to be a successful investor.

A successful investor concentrates on what works specifically for him/her. This does not require loads of information. Just remember there is such a thing as too much information. This can lead to information overload and poor choices.

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Content copyright © 2013 by Sandra Baublitz. All rights reserved.
This content was written by Sandra Baublitz. If you wish to use this content in any manner, you need written permission. Contact Sandra Baublitz for details.



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