Business Innovators Radio - Episode #76 – Behavioral Finance – The 15 Minute Financial Feast Podcast – With Mark Triplett & Troy Westendorf

Episode Date: February 14, 2025

We believe that every dollar has a purpose and a timeline. When and how your retirement assets will be used should be understood before making important financial decisions.The Triplett-Westendorf Purpose and Timeline 5 Step Planning Process (PT5) begins with Discovery.Understanding where you are now, and then defining where you want to go (Your Purpose) and when you want to get there (Your Timeline), programs your financial GPS. Our Purpose and Timeline 5-step process (PT5) programs your financial GPS.Learn more: http://triplett-westendorf.com/ | https://mypt5.com/The 15 Minute Financial Feast Podcasthttps://businessinnovatorsradio.com/the-15-minute-financial-feast-podcast/Source: https://businessinnovatorsradio.com/episode-76-behavioral-finance-the-15-minute-financial-feast-podcast-with-mark-triplett-troy-westendorf

Welcome to the 15-minute financial feast podcast, bringing you 15-minute segments to help you retire with purpose on time. We're serving up food for thought and bread for the head. Are you hungry to learn? Here are your hosts, Mark Triplett and Troy Westendorf. Welcome to another episode of the 15-minute financial feast. Today, you are listening to the audio from a live television interview where one of our favorite local news station anchors asked us questions about a financial feast. topic on the minds of many hardworking folks in our community who are trying to make good decisions and get ahead. When making decisions about your finances, humans are, you know, emotionally

driven, and that can certainly get in the way of making some of the wisest financial moves. Our local financial professional, Mark Trippelin, is joining me live here to explain behavioral finance and the psychology that pushes us to make some of these irrational money decisions. and I appreciate that we're talking about this. I do find that's interesting. So, Mark, first of all, tell me what exactly is behavioral finance? Well, Joseph, we like to assume that people make financial decisions rationally, but that's not really the case.

We frequently make decisions based on built-in biases and emotions, and really understanding our irrational biases and how they impact emotional-based decisions can really help us avoid making poor choices. You know, Mark, when we think about biases, I think a lot of times we think about just kind of like maybe on a social perspective and not so much as financial. How are biases affecting our finances? Well, there are many different biases that can come into play in decision making, but some of those that we really pay attention to in behavioral finance are things like loss aversion. We tend to fear losses more than we enjoy the opportunity for gains. And that can lead us to make decisions like selling into a downturn when the stock market starts to pull back and we panic sell, when we really should be buying into that opportunity and taking advantage of those stocks that are on sale.

Another one I really like to talk about is overconfidence bias or the tendency to overestimate one's ability. Now, I'll use this example for you. 80% of drivers think that they are better than average drivers, even though it's statistically impossible. That also spills over to investors being overconfident in their decision making as well. And I find it really interesting. You brought up that example of when the stock market plummetes, how a lot of people just rush out there. Can you just kind of dive a little bit deeper? So how should people react in that moment rather than just rushing out and just trying to get rid of, you know, sell that stock? Look, there are some investments that are just inherently risky.

But oftentimes when we have a systemic market downturn, things that occur, things that occur, when we have political unrest or something somewhere in the world or a natural disaster. It takes the entire global economic system down. Those companies that we might buy goods and services from, there aren't going out of business tomorrow, their value might go down. And effectively, their stock value is on sale. And I always tell folks to think of it in this way. If something that you routinely buy that you value went on sale at the store,

how much of that would you try to buy if it was at a 25% discount? probably a lot of it. And you have to be counterintuitive when we see a pullback in the market and we know that we don't need those resources for retirement for a very long period of time. That should be an opportunity signal to us to step in and take advantage and buy some of those shares of those really well-known profitable companies when everybody else is panicking. And because we're running out of time just really quickly, if you can answer this, How can people just stop making those emotional decisions? I know it's a little easier set than done.

First of all, recognize that we're all prone to this. Number two, have a plan in place and then stick to it, even though emotionally you may not feel like it. If you have a roadmap to get you from where you are today to where you want to go and you execute it with precision and get the emotion out of it, that's the best way to do it. And the best time to plan is when you're, not under emotional distress. That's the key right there. All right, Mark, Mark, appreciate your time

as always, sir. You've been listening to the 15-minute financial feast podcast. Remember, every dollar has a purpose and every dollar has a timeline. If you have questions about today's topic, schedule a call with a team member. Visit www.com.com. Until next time, be sure you're taking steps to retire with purpose on time. Mark Triplett. is an investment advisor representative of and advisory services offered through Royal Fund Management LLC, an SEC registered investment advisor. Nothing contained in this program should be considered an offer to buy or sell securities. Different investments have different risks associated with them, and not all investments are appropriate for all investors.