The core challenge as an investor is setting aside instinctive physiological and emotional responses at the root of our brain’s decision-making processes. Though they are perfectly suited to protect us from physical harm, they have little value in modern investing.

There’s a common misconception that cash is a risk-free investment. Some investors find emotional comfort in building cash stockpiles even though they’re ignoring the daily effects of inflation. On the other hand, no one denies the increased cost of living that we each witness over our lifetime, as the example of milk pricing demonstrates above. The challenge? Avoid acting on emotion and leaving large sums of cash on the sidelines. Trust in a well-designed investment plan to provide for your future and offset the effects of inflation.

Many people thought that California Chrome was a shoo-in to win the coveted Triple Crown, last achieved some 36 years ago by Affirmed in 1978. When the horse lost, the owners were shocked and amazed.

It is gambling after all. The “House” wins—especially over the long term.

At Hill Investment Group, the “House” approach is to stack the odds in favor of our clients for the long term—not a single race. No one can consistently pick the winner of any one race; however, based on data and evidence, we help investors increase their chances of success by owning the market in a structurally efficient way. It pays to focus on what we can control: rebalancing, tax efficiency, and minimizing expenses.

Horse racing is pure entertainment. Personal investing is serious business. It pays to know the difference.

photo credit: Frankie Roberto, used under the Creative Commons license