Investing—Psychology—Money
Mastering Your Emotions to Achieve Investing Success
The biggest THREAT to your portfolio being you, you need to CONQUER your inner demons when investing.
As investors, it’s important to remember that emotions can play a big role in our decision-making. These emotions can include fear, greed, euphoria, anxiety, and a range of other psychological states. But it’s important to try to set those emotions aside and focus on making rational, well-informed decisions based on rational analysis of the market and potential risks and rewards.
For example, it’s natural to feel fear when the market is volatile. But fear can also cause investors to sell their holdings during a market downturn, even if the fundamentals of the companies they own are strong and the downturn is temporary.
Similarly, who is not greedy when seeing potential gains ? However, greed can also cause investors to chase after hot stocks or investments with the potential for high returns, even if they are risky or not well suited to the investor’s overall financial goals.
One way to do this is to develop a solid investment plan and stick to it, no matter what the market is doing. This can help to keep us focused on our long-term goals and avoid making rash decisions based on short-term market movements and ambient noise.
It’s also a good idea to regularly assess our portfolios and make sure our investments are still aligned with our goals and risk tolerance. This can help us avoid the temptation to chase after short-term gains or make panicked decisions during market downturns.
Overall, the key is to stay disciplined and avoid letting our emotions dictate our investment decisions. By doing so, we can increase our chances of success in the long run.
If you want to dig deeper, I definitely recommend reading “The Psychology of Money: Timeless lessons on wealth, greed, and happiness” (affiliated link), by Morgan Housel.
I’m Raphaël, founder and editor-in-chief of Investiforum.fr, a financial website for French-speaking private investors. Thanks for reading! Don’t hesitate to follow me on Medium, Twitter or Polywork.
This article is for educational and entertainment purposes only and shouldn’t be considered as financial or legal advice. Not all information will be accurate, but all the data is sourced. Consult a professional before making any significant financial decisions. This article shouldn’t be seen as an incentive to buy or sell any of the securities mentioned therein, nor endorsement to any presented strategy.
