When you look at your investment portfolio, what do you see?
Are you able to focus on all of its details at once?
Many investors think they are looking at the big picture when they read over their financial portfolio, but many important details escape their attention. Their inattention to small details can have a negative effect on the decisions they make.
What important information are you missing?
Looking at a whole picture but missing the most significant details is actually very common. How many times have you searched for a certain item, looking all over the place, when the object you were seeking was sitting right in front of you all the time?
This phenomenon has a name – “the illusion of attention,” and it occurs in many spheres of life. Examples of this are found in the popular book The Invisible Gorilla by Christopher Chabris and Daniel Simons. Click here to watch short video clips about the illusion of attention that were compiled by Chabris and Simons.
How does this affect you as an investor?
Do you read financial summaries and news articles often? If so, don’t rush to give yourself a pat on the back. That is because even though you are immersing yourself in financial information, you may overlook certain critical details because a minor point might have attracted your attention, distracting you from what is really important.
For this reason, don’t just skim over your investment portfolio or other financial information. Pay attention to both the whole picture, as well as the small details. If you don’t know what is important or not, consult with a professional advisor for help. Qualified advice can act as “Ritalin,” helping you focus on what is important, and not be distracted by irrelevant information.
Douglas Goldstein, co-author of Rich As A King: How the Wisdom of Chess Can Make You A Grandmaster of Investing, is an avid chess fan, international investment advisor and Certified Financial Planner (CFP®).