You May Love Money but It May Not Love You Back: Study

“Love of money” may not be all it’s cracked up to be. In fact, if you love money, chances are it doesn’t love you back.

A new study from State Street’s Center for Applied Research surveyed three thousand retail investors around the world. The study found that nearly 60% of investors who scored high on a “love of money” scale have had bad financial outcomes. And the opposite is also true: those investors who love money the least made better investment decisions.

According to State Street, the probable reason is that money lovers are susceptible to instant gratification. They want to have the money now, and they make short-term decisions. They’re also less likely to save for their retirement and more likely to buy high and sell low.

So who loves money the most? US respondents ranked fourth highest, exceeded by those in India (which scored first), China, and Brazil. And age matters: some two-thirds of millennials scored high on the survey, compared to 48% of baby boomers.

According to the study, there’s no correlation between money love and existing wealth. Suggests Suzanne Duncan, head of global research at State Street, some people just have a higher emotional connection to money.

The study underscores the importance of getting advice from an unbiased third party when making money decisions. If you think you might be a money lover – or simply guilty of short-term thinking when it comes to investing – remember that your advisor has been trained to help guide you. Don’t let money get the best of you.

What Should You Do with a Financial Windfall?

When it comes to investing a windfall – such as an inheritance or retirement-account rollover – you’ll likely find a number of different options being discussed in the financial media. But which one of these many approaches is best for you?

Dollar-cost averaging, or investing the new money a little at a time, is a common approach. The reason: By dribbling your money into the market, you’ll invest some at lower prices and some at higher prices, averaging out the risk over time. So, for example, if you have $250,000 to invest, you’d move $20,833 each month ($250,000 divided by twelve) from a savings account to a portfolio of stocks and bonds.

However, this ignores the fact that the longer it takes to obtain the mix of stocks and bonds that is consistent with your goals and risk tolerance, the longer it will be before your money is invested the way it should be.

Another strategy is to decide on an allocation of stocks and bonds that will help you meet your financial goals, and then invest the total amount based on that allocation. So, for example, you might invest 70% of your $250,000 in stocks ($175,000) and 30% in bonds ($75,000). This will allow you to reach your target allocation quicker (because the money isn’t sitting in your savings account for a year).

Which approach is better? It depends on your individual goals, time horizon, and tolerance for unknown risk. The reality is, no one knows what stock or bond prices will do in the future, especially in the short term.

So, if you’re unsure how to invest your windfall, or you just can’t bring yourself to invest all of your money at once, why not talk to your advisor about combining approaches? For example, you might limit the period over which you gradually invest, doing it over three or six months instead of twelve.