The behavior gap Simple ways to stop doing dumb things with money

In this accessible book, financial planner and Morningstar Advisor columnist Richards sits down to talk about money and the crazy choices we make. Through personal stories and simple ideas enlivened with a touch of imagery (often literally sketched on the back of a napkin), Richards explains why we keep making bad choices and shows us that we're often making decisions with our emotions rather than our intellect. However, Richards isn't saying that investors try to eradicate their emotions; rather, they should aim for an investment strategy that balances managing fear and greed in a way that "truly reflects your own emotional strengths and weaknesses." Once readers recognize what influences their decisions, they'll be much better able to act rationally. Richards then covers a vast array of topics, from investor emotions to information overload. He offers suggestions for combatting decisions that might be overly influenced by emotions, such as in periods of market turmoil, by taking "the overnight test," trying a media fast, or simply finding your focus. Whether relating a Zen story or talking about the Economist smirk, Richards succeeds in showing us how what we often think is right regarding investments rarely is. (Jan.) (c) Copyright PWxyz, LLC. All rights reserved.

New York Times blogger Richards discusses "how to cope with fear and stay grounded when making financial choices." In an era of austerity and lowered monetary expectations, the author provides smart, simple methods for taking charge of your personal finances. He begins with the premise that "financial decisions aren't about getting rich"--they are "about getting what you want--getting happy." The one element investors must learn to understand and control to maximize personal contentment/financial security is their own investing behavior. Richards coins the term "behavior gap" to describe "the gap between investor returns and investment returns," a phenomenon that occurs when individuals make decisions that work against their best financial interests--in fact, he writes, "all investment mistakes are really investor mistakes." Investing is based in choice, and people need to accept responsibility for their actions instead of blaming external factors like a fickle market or troubled economy. The path to success requires managing emotional responses to recessionary downturns, which play on investor fear, and prosperous upturns, which play on investor greed. This allows for a more balanced approach to managing financial portfolios. Richards' straight-shooting observations about cultivating fiscal self-discipline and awareness, embracing uncertainty and accepting personal fallibility seem like statements of the obvious. However, the obvious is often overlooked during turbulent economic times, which makes Richards' book is a must for small investors serious about gaining control of their financial lives. A solid, sensible guide for finding and maintaining financial stability in an unstable world.]] Copyright Kirkus Reviews, used with permission.