The spelling may be different, but the meaning is similar. We all hate to think that someone else is smarter than us. But it turns out, fighting multi-billion dollar ad campaigns, retailers, or Wall Street is a losing proposition for the average person.
Expect to see the word "phool" a lot in 2016 if a book by Nobel Economics Prize winners George Akerlof and Robert Shiller, "Phising for Phools," becomes a runaway hit this year. The two coined the phrase to describe a person who gets caught in a "phishing" scam, which covers a wide variety of financial scams. Save yourself by being smart enough to know what you don't know so you can focus on making money and building up your retirement nest egg.
The recent Forbes article, "One Powerful Money-Making Move for 2016," explains that most of us believe we know what's good for us, but when it comes to money we shoot ourselves in the foot—and wallet!
The root of phoolish behavior, Akerlof and Shiller say, is the self-conceit that you think you know more than all of the smart people who are trying to take your money every day. Can you compete with computers and sophisticated programs that take advantage of pricing glitches and make trades in milliseconds, as well as robots who move at the speed of light?
Despite our tendencies, we don't have to be phools. Here are some wise suggestions to consider:
• Adopt a Long-Term Investment Strategy. Don't jump into a stock or product based on a newspaper headline. If other people think something is hot, it could very well be overpriced. It'll eventually come down in value. Decide what you want to do with your money decades down the road for things such as college, retirement and estate planning.
• Buy and Hold. This can be less than glamorous, but you have no advantage timing any market because thousands of professionals will have much better information than you do. If you need stocks for growth, examine their risk and adjust your portfolio accordingly.
• Select Index Funds. You can't buy last year's returns, so select index funds that cover global stocks, bonds, and real estate. Check them once a year. If you get sick to your stomach when you look at the risk you're taking, make a change, only do so annually.
Try to not to worry too much about the fact that there are so many people who are much smarter than the rest of us. They win Noble Prizes, but you don't have to. By planning in advance and taking these smart steps, you'll be able to build financial security and peace of mind.
Reference: Forbes (December 28, 2015) "One Powerful Money-Making Move for 2016"
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