Shield Your Investments From Your Emotions

22

APRIL, 2018
AK Equity Group
It’s normal for emotions to be part of investing; after all, it’s your money in play and you’re only human. That being said, there are a few strategies you can use to maintain a level-headed mindset as an investor.

Strategy 1: Recognize that market volatility can spark emotions that lead to hasty (and costly) mistakes.

A dip in your portfolio balance during a period of market volatility may create an urge to take sudden drastic action. You may find yourself considering leaving the market entirely in favor of lower-risk, lower-return investments.

This gut feeling will not necessarily lead you to take profitable actions, especially if you are choosing to abandon a well-thought out plan. In many cases, this kind of reactive behavior to market volatility only results in selling low, and then having to buy high to re-enter.

Strategy 2: Find ways to foster an intellectual perspective, instead of an emotional one

Rather than making investment decisions that are driven by emotion, aim to respond from an intellectual perspective. This will help keep you on track in meeting your long-term investment goals, in spite of short-term market volatility.

Have a Plan

A well-developed financial plan allows you to be proactive about building your wealth, and can greatly increase your chances for investing success. While it may take some time and effort to develop your investing plan, it will benefit you in the long term- especially when you’re faced with unexpected market developments.

Your investing plan will likely include a mix of short-term and long-term goals, your contribution schedule, your target asset mix, and a strategy for incorporating future income sources and big expenses.
A clear investing plan will help you stay the course, anchoring you to your objectives at times of market volatility.

A well-developed financial plan allows you to be proactive about building your wealth, rather than reactive.

Strategy 3: Lean On Expert Support

A financial advisor can help provide an objective, big-picture perspective on your portfolio. Where it’s only natural for you to have emotions in play when investing, a financial advisor can look at your portfolio from arm’s length, and contribute a more rational view. Part of their role is to provide valuable guidance when you feel the urge to stray from a sound investing plan.

If you’re considering partnering with a financial advisor, we can help with that.

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