TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth OVERTHROW THE STATUS QUO Many people appreciate status quo. While you may automatically think I'm referring to the British rock band responsible for that annoyingly catchy 'Rockin' All Over the World' song, I am instead referring to that familiar state of existence that is current yet constant. Do you know someone who chooses to drive on the same roads to work each day? Or someone who eats the exact same thing for lunch every day, or could never fathom ordering anything other than their regular dish from the same restaurant they visit every week? While some people may find it easier just to remember one number on the Chinese restaurant menu ("number 59, Mongolian beef please"), the gravitation towards the status quo is essentially a tendency to want things to stay the same. In a world of constant change and flux, does it really matter if we seek this out in our ham and cheese sandwich every day? host of self-help books will encourage you to interrupt, challenge, or let-go of the status quo, citing clarity and a greater sense of purpose as potential outcomes. Your investment portfolio may also benefit too, as status quo bias, otherwise known as resistance to change, may be impeding your asset's returns. Many successful investors advocate a buy and hold strategy over the long-term, however, this approach can become problematic if you are not open to making changes and evolving with the times. There have been numerous innovative developments in the investment space in recent years, most notably the introduction of Exchange Traded Funds (ETFs), which allow investors to access a wide basket of shares in just one trade. A significant benefit of ETFs lies in their design of trading close to the fair value of the underlying stocks, meaning the potential for paying a price that is either overvalued or undervalued is removed - a notable downside of the 'Listed Investment Company' structure. Similarly, utilising only term deposits for income generation can be acceptable, until the interest rates offered on new deposits are lower than the annual rate of inflation, meaning that the purchasing power of your interest earned is less than what it was last year - or in other words, that you go backwards. Another example is missing out on the new areas of growth. If you stuck with old economy stocks (for example, industrials and manufacturing), you would have missed out on the rapid growth of new economy companies, such as technology stocks Apple, Microsoft and Nvidia. Status quo bias is a complex interplay of fear, comfort and potential for regret. However, recognising your bias and increasing your flexibility and willingness to experiment can gradually recalibrate your comfort with change, and over time, your performance outcomes. Adopt this frame of mind and you might quickly cover the cost of your next Chinese restaurant visit! BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1, 462-464 Peel St, Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account. You are advised not to act on anything contained herein, or discussed as a consequence of the contents of this document, without receiving financial advice from a suitably qualified person such as a financial planner, lawyer or accountant. Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au AW7271886 TALKING FINANCE with Michelle Higgerson of Baiocchi Griffin Private Wealth OVERTHROW THE STATUS QUO Many people appreciate status quo . While you may automatically think I'm referring to the British rock band responsible for that annoyingly catchy ' Rockin ' All Over the World ' song , I am instead referring to that familiar state of existence that is current yet constant . Do you know someone who chooses to drive on the same roads to work each day ? Or someone who eats the exact same thing for lunch every day , or could never fathom ordering anything other than their regular dish from the same restaurant they visit every week ? While some people may find it easier just to remember one number on the Chinese restaurant menu ( " number 59 , Mongolian beef please " ) , the gravitation towards the status quo is essentially a tendency to want things to stay the same . In a world of constant change and flux , does it really matter if we seek this out in our ham and cheese sandwich every day ? host of self - help books will encourage you to interrupt , challenge , or let - go of the status quo , citing clarity and a greater sense of purpose as potential outcomes . Your investment portfolio may also benefit too , as status quo bias , otherwise known as resistance to change , may be impeding your asset's returns . Many successful investors advocate a buy and hold strategy over the long - term , however , this approach can become problematic if you are not open to making changes and evolving with the times . There have been numerous innovative developments in the investment space in recent years , most notably the introduction of Exchange Traded Funds ( ETFs ) , which allow investors to access a wide basket of shares in just one trade . A significant benefit of ETFs lies in their design of trading close to the fair value of the underlying stocks , meaning the potential for paying a price that is either overvalued or undervalued is removed - a notable downside of the ' Listed Investment Company ' structure . Similarly , utilising only term deposits for income generation can be acceptable , until the interest rates offered on new deposits are lower than the annual rate of inflation , meaning that the purchasing power of your interest earned is less than what it was last year - or in other words , that you go backwards . Another example is missing out on the new areas of growth . If you stuck with old economy stocks ( for example , industrials and manufacturing ) , you would have missed out on the rapid growth of new economy companies , such as technology stocks Apple , Microsoft and Nvidia . Status quo bias is a complex interplay of fear , comfort and potential for regret . However , recognising your bias and increasing your flexibility and willingness to experiment can gradually recalibrate your comfort with change , and over time , your performance outcomes . Adopt this frame of mind and you might quickly cover the cost of your next Chinese restaurant visit ! BAIOCCHI GRIFFIN PRIVATE WEALTH Level 1 , 462-464 Peel St , Tamworth NSW 2340 6766 9000 AFSL No 424658 This article is general in nature and does not take your individual situation into account . You are advised not to act on anything contained herein , or discussed as a consequence of the contents of this document , without receiving financial advice from a suitably qualified person such as a financial planner , lawyer or accountant . Follow us on Twitter @BaiocchiGriffin Find us on Facebook facebook.com/BaiocchiGriffinPrivate Wealth www.bgprivatewealth.com.au AW7271886