6 Reasons We Don’t Invest the Way We Should

Many investment decisions are driven by emotional and psychological biases that may be inconsistent with our long term financial goals. On one hand we want our assets to grow to the point where enough wealth has been accumulated to meet our personal goals. Yet this will only happen by investing money prudently. We need to make decisions and select strategies to maximize investments year after year. Unfortunately the actions we take can be self-defeating.


1. Our Fear of the Future

We have a sense of uncertainty about the future. We as ourselves questions like: “Will I have enough money to sustain my standard of living?, How much do I need to save?, How do I know what is the best investment?”. We let these fears influence our decision making.

2. The Need to Forecast and Predict

Because of our fear of the future, we feel a need to comprehend and predict future events. If someone could tell us what was going to happen with things like inflation, tax rates, long term interest rates, share prices, overseas markets then we would have less fear about the future from an investment perspective. We are convinced that someone has the information, power and insight to predict the future. But the truth is nobody does.

3. Wanting to Believe Past Performance Can Predict Future Performance

We want to believe that the future can be told through track-record investing. We allow ourselves to believe that because a certain mutual fund manager had a good year and out preformed the markets that they will do so again. We want to think that because a certain asset class had a good year that it is likely to again. That just isn’t the case.

4. Information Overload

It is so easy to become overloaded with information these days. We feel compelled to understand all of the information available to us; including the internet, books, newspapers, magazines, TV talk shows, advertisements and even friend’s experiences. Instead of reducing fears all of this information confuses us and often creates doubts about investing.

5. Making Emotion Based Decisions

As investors, we never overcome our own humanity. Even though we think we make decisions based on logic, typically emotions such as trust, loyalty, hope, greed and fear drive our investment decisions.

6. Breaking the Rules

There are three commonly accepted rules of investing: 1) Own equities 2) Diversify and 3) Rebalance. And the golden rule of investing is: Buy when prices are low and sell when prices are high. It sounds simple. However, when we make decisions based on emotions, we wind of breaking these seemingly simple rules.

The end result is that many of us don’t have peace of mind. Our fear of not having enough money, combined with worry, frustration and anxiety cause us to make decisions that inhibit us from accomplishing our meaningful life goals.

— Nikki Earley

Struggling Sears Teams with Amazon to Sell Appliances

Struggling Sears Teams with Amazon to Sell AppliancesSears announced that it will begin selling its appliances on Amazon.com, including smart appliances that can be synced with Amazon’s voice assistant, Alexa. Sears, which also owns Kmart, said that its Kenmore Smart appliances will be fully integrated with Amazon’s Alexa, allowing users to control things like air conditioners through voice commands. “The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.,” Chairman and CEO Edward Lampert said in a company release.

Sears has struggled with weak sales for years, and announced more store closings earlier this month, partly due to the emergence of Amazon.com and other internet operators. Sears had said in March that there was “substantial doubt” it could continue after years of bleeding money. Many took the agreement with Amazon.com as a lifeline.

Neil Saunders, managing director of research firm GlobalData Retail, said it is a win for Sears, putting its products where customers are shopping. Sales at existing Sears stores, a key measure of a retailer’s health, have been in rapid retreat for years. “Other channels and routes to market are needed,” Saunders said.

Amazon has changed the face of retail since it became a public company more than 20 years ago. It recently began offering discounts on its Prime membership for people who receive government assistance, making a play for the low-income shoppers at places like Walmart. And it announced last month that it was testing a new wardrobe service that lets members of its Prime program try on styles before they put items on their charge card—at no upfront fee.

The agreement with Amazon goes beyond the point of sale for Sears. Also part of the deal is delivery, installation, and the service work that comes with product warranties, which will be provided by Sears Home Services. Appliances have long been Sears’ bread and butter in the retail world, but lately the space has become more crowded, with players like Best Buy, Costco, and J.C. Penney looking to take a larger slice of the market. As Sears has struggled with heavy debts and slumping sales, these players have been gaining ground in the category.

Appliances are one of the categories that have helped draw customers. Just last month, Sears opened a store—the first of its kind for the company—that only sells mattresses and appliances. Plans are also underway to open additional freestanding Sears stores dedicated to these two categories—what Sears has called “two of its strongest.”

In partnering with Amazon, Sears is looking to expand its reach and grow the Kenmore nameplate. However, the move is a double-edged sword, because it also gives shoppers another reason to avoid heading to a Sears store. “This is consistent with Sears’ aim of becoming more of a remote seller of strong brands without the encumbrance of expensive real estate,” Saunders said. “The move makes sense as it puts Sears’ brand products where customers are shopping and gives them a better chance of selling.” While Saunders does not think the deal represents a big shift for the retail sector, he said that it does illustrate how retailers must adapt and offer goods through multiple channels if they want to thrive. He believes others are already scrambling to do so.


1. http://cnb.cx/2ue2D7R – CNBC
2. http://bit.ly/2ufcv16 – US News & World Report

The Good News Is . . .

Good News• Leading indicators increased in June, beating expectations and pointing to an improving economic outlook. Leading indicators increased 0.6% in June, beating estimates for a 0.4% rise. This is up from a gain of 0.3% in the prior month, according to the Conference Board. The index is a closely followed indicator for how healthy the U.S. economy is. The Conference Board tracks 10 components, including manufacturers’ new orders, stock prices, and average weekly initial claims for unemployment insurance. Renewed strength in the index hints at general economic momentum through the second half of the year.

• Bank of America Corp., a leading diversified global financial institution, reported earnings of $0.46 per share, an increase of 12.2% over year-earlier earnings of $0.41 per share. The firm’s earnings topped the consensus estimate of analysts by $0.03. The company reported revenues of $22.8 billion, an increase of 7.0%. Management attributed the results to strong increases in loan and deposit volume, as well as significant increases in its operational efficiencies.

• McCormick & Company has agreed to buy French’s mustard and Frank’s Red Hot sauce in a deal worth $4.2 billion. The spice maker, which is based in Sparks, Md., near Baltimore, will acquire the food business of Reckitt Benckiser, the British consumer-goods company, and intends to finance the deal through a combination of debt and equity. The business includes the French’s, Frank’s Red Hot, and Cattlemen’s brands. With the acquisition of Frank’s Red Hot, French’s mustard, and other products, McCormick aims to become a one-stop shop for condiment, spice, and seasoning needs. Reckitt Benckiser has moved away from the food business in recent years and increasingly focused on consumer health products, including Durex condoms, Nurofen pain relievers, and Scholl foot care.


1. https://bloom.bg/2eVhfSb – Bloomberg
2. http://cnb.cx/2lwnm3s – CNBC
3. http://bit.ly/2uGJhc9 – Bank of America Corp.
4. http://nyti.ms/2udSJRM – NY Times Dealbook

Planning Tips

Tips for Renting a Room or Home through Airbnb

Tips for Renting a Room or Home through AirbnbThe growing sharing economy offers ways to make extra income that were not available even a few years ago. Many of these opportunities require you to be comfortable navigating unclear local laws, sharing your most valuable possessions with strangers, and taking on additional legal liability. Airbnb is no exception, but if you are willing to take on the risks, you could make thousands of extra dollars a year. Below is a brief list of things to consider if you are thinking about listing a room or a house with Airbnb. Be sure to consult with your financial advisor to evaluate the risks and determine if this is appropriate to your situation.

How to List – On Airbnb, you decide when to make your space available and at what price. Listing is free, and you can individually approve potential guests. In setting your price, you will want to consider the going rate in your area by looking at competing listings. You will want to consider the costs of hosting–including cleaning, higher utility bills, taxes and Airbnb’s host fee, which is 3% for payment processing. Your guests pay Airbnb’s 6% to 12% booking fees. Make sure you understand Airbnb’s hosting standards for listing accuracy, communication with guests, keeping your reservation commitments, cleaning your place for each guest, and providing basic amenities such as soap and toilet paper.

Getting Permission and Paying Taxes – Before listing your place on Airbnb, you might need to get permission. If your property is controlled by a homeowners’ association or co-op, check its rules to make sure you are allowed to host. If you rent, you will want to get your landlord’s blessing. Airbnb suggests adding a rider to your contract with any of these entities to specifically address hosting through Airbnb. In addition, your locality might require a business license, and you might owe local taxes on any income you earn. You will also owe federal taxes on Airbnb income, which will be reported to you and to the IRS on form 1099. However, you may be able to reduce your taxable Airbnb income by deducting business expenses, such as cleaning fees and insurance.

Home Safety – Airbnb also provides guidelines for hosts to make their homes safer. Minimizing safety risks to guests minimizes your risk of being sued by a guest who is injured on your property. Guests also might give you lower ratings if you have not taken basic precautions to protect them, such as installing smoke and carbon monoxide detectors and eliminating or pointing out any trip or fall hazards. If you are particularly negligent, Airbnb could refuse to let you continue to be a host.

Insurance – Airbnb’s host guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including the United States, United Kingdom, and Canada. Airbnb’s insurance is not a substitute for homeowner’s or renter’s insurance, and it does not protect against theft or personal liability. Talk to your homeowner’s or renter’s insurance company to make sure your policy will cover your property, your possessions, and your liability while renting out your place through Airbnb. If you need extra coverage, an umbrella policy might be the ticket. Airbnb offers liability insurance for U.S. hosts. It offers up to $1 million per occurrence and is secondary to any other insurance (such as your homeowner’s policy or your landlord’s insurance) that might cover the incident. Like any insurance policy, Airbnb’s liability insurance has conditions and limitations, so if you want to know exactly what is covered and what is not, read the fine print thoroughly.

Payment Guarantees – Guests pay you through Airbnb. As long as there are no problems, Airbnb will release your payment within 24 hours of your guest’s arrival, and you will receive it within as soon as a few hours, if you choose to get paid via PayPal or via Payoneer prepaid debit card. You will receive payment within a few days if you use a bank transfer, or within 15 business days for a mailed check. Guests must notify Airbnb within 24 hours of check-in if there is a problem that warrants a refund. If you do not respond to guests who try to contact you about a problem, they might be allowed to complete their reservation and receive a partial refund. Airbnb could require you to refund a guest’s payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, do not clean your home, or otherwise fail to meet Airbnb’s hospitality standards. Airbnb suggests making sure you are available within 24 hours of guests’ scheduled check-in to address any concerns they might have since many problems are easily resolved.


1. http://bit.ly/2q8ZghS – LearnAirbnb.com
2. http://bit.ly/2ufvCrR – Forbes
3. http://bit.ly/2gNY6nP – Investopedia
4. http://bit.ly/1RNoXGZ – nolo.com
5. http://bit.ly/2udKWDA – LegalZoom.com