Video
The Problem With Mental Accounting Bias
Mental accounting bias is when people make decisions solely based on how they categorize something. I’m Hannah Whatley, an advisor with Rather and Kittrell.
Oftentimes, we see this with retirees who see their money as income or principal. And they plan to live off the income. Oftentimes, these people hold large positions in high-dividend-paying stocks or high-yield bonds.
There’s a time and a place for these positions, but I’ve seen people erode their principles without noticing because they’re so focused on getting that high-income payment. Instead, we recommend focusing on total return.
This will help you build an income stream while also allowing your principal to grow – even in the midst of high inflation. If you’d like to learn more about creating an income stream in retirement, visit us at rkcapital.com.
