Investors have an immense number of factors that could influence how they make decisions and look at their financial life. Sometimes the influences are easy to see and understand, while others are more subtle and less noticeable. It is challenging for investors to not only reconcile these influences, but also to identify them. Knowing why you are making a decision can often be just as important as the decision itself.
Many of these factors influence every aspect of an individual’s life, not just their financial situation. While everyone would like to believe they make financial decisions rationally without personal influences, we are all human and there is a personal component to the choices and decisions we all make every day, including in our financial lives. When specifically looking at financial matters however, there are three top factors that influence the way investors look at their financial matters, according to recent Spectrem Group research.
The factor that the largest percentage of investors indicate impact the way they look at financial matters is age. This is not surprising given that age has a direct connection in most cases to when an individual is going to retire, when they will be paying for higher education or having children. It is in various phases of life, often connected to age, where investors are looking at their financial picture differently. Age also impacts how an individual looks at their financial life because of their life experiences. An investor who has lived through the Great Depression has a very different financial outlook than someone who has not.
Wealth is the second most commonly identified factor influencing financial matters for investors. The quantity of assets and wealth an investor has can often contribute the amount of risk an investor can tolerate, how they would prefer for their assets to be distributed upon their death, how comfortable they feel about their financial future, and many others. Individuals at the highest levels of wealth have concerns and financial needs that are wildly different than those at lower levels of wealth.
Employment status impacts the way over a third of investors look at their financial matters. This is the third most commonly identified factor influencing financial matters. When an investor is retired, they often have a change in their overall financial outlook, while working investors are at a phase of life that requires a different outlook. Additionally, investors that work part-time are also in a unique situation that often comes with a combination of the mindset you find in working investors and those who are retired.
Some of the factors that are less common include an investors nationality, identified by only 11 percent of investors as impacting their financial matters, and religion, with only eight percent of investors feeling that religion impacts their financial matters. Politics are a factor in how only five percent of investors look at their financial matters.
Some investors may have a number of other factors that are stronger influences than any of those previously discussed. Regardless of what impacts an investor’s financial decision-making, they should discuss these influences with their financial professionals so their situation will properly reflect all of their unique situations.
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