My son Jared flew to Denver this week to do some research on a company. On the always turbulent flight into Denver, Jared noticed that the lady sitting next to him was getting extremely anxious. She would grab the arm rests and plant her feet firmly with every small bump. He commented that the turbulence did not bother him at all, but this lady was deeply fearful of it. Of course, Jared knows quite a bit about flying. Since we usually fear what we do not understand, like this particular passenger, we often fear the wrong things.
We have recently experienced some terrible national tragedies, which will surely result in vacationers to Florida having a heightened perception of the risks involved. In the process they will very likely exaggerate in their mind the likelihood of those risks coming to pass.
Being a pilot, I know something about how people perceive risk. People continually caution me about the risks of flying. Considering the statistics, I wonder why they never warn others in our office about the activities they engage in. This week my daughter and son-in-law were in a wakesurfing competition and I don't remember anyone issuing warnings to them.
According to the NTSB 550 people die in airplane accidents each year in the U.S., but another 650 people die in boating accidents. I think my daughter really needs to be warned about the hazards of her wakesurfing. But then, it is easier to understand boats than airplanes, thus flying is perceived to be riskier.
Investors often fear big world problems that are beyond their control. Like a jumpy passenger, the turbulence of the world makes them anxious, but in my experience, rarely do external events prevent individuals from retiring. Thus, they tend to worry about the wrong things. It is in the management, or mismanagement, of our own individual resources that I believe the greatest risk to retirement success lies.
Let me share just one example. A man came to me asking for help in my Vegas office after he attended some free dinner seminar that resulted in him being sold a 17-year annuity, comprising his entire retirement account. The man is 75 years old, so he likely won't see that money again in his lifetime. I am not sure what big economic matters worried that man in his life, but I bet the last thing he worried about was the REAL cost of that free dinner, yet it became likely his biggest investment mistake.
So every year in America 550 people die in Airplanes. But, every year 5,000 people also die while walking. So statistically, if you really want a truly white knuckled experience, go for a walk. Or worse still, accept an invitation this summer for one of the many free dinner seminars. Now that is a financial event you should truly fear. Fear can be a useful emotion, but only if you are knowledgeable enough to know what you should and should not be fearing.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 1173 S. 250 W. Suite 505, St. George, UT 84770.
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