Investing and trading are the soap operas of the financial world. Financial stress can cause sheer panic and can, in fact, lower people’s IQ points, and those people who are emotionally involved in investing can feel every high and low. Investing is something that should not be watched like a hawk. You should put your money in something that you are comfortable with and leave it for years. But for those people who can’t help but feel emotionally invested, here are a few things to consider.
Streamline Your Decisions
Rather than making a wide variety of investment decisions, you need to take the “lazy investor” approach. With so many investors rating traders on their abilities to diversify and tackle the most profitable options, streamlining your decision-making can seem like going against the grain of the modern approach. But if you find yourself too emotionally invested, opting for a couple of simple positions and making automated contributions can help you take a step back.
Set Specific Times to Check the Returns
It can feel like social media, where you check something and immediately get sucked in. It’s important to be strong and to get into the habit of avoiding minute-to-minute returns. Throughout the course of the day, you could see a significant loss, but this loss is greatly reduced when you look at it throughout the course of a year. When you reduce how much you check the returns, you feel more in control of your emotions and you won’t get drawn into the drama.
Have a Methodology
Deciding on your investment goals at the outset will give you more control over how you feel. A lot of people just love the idea of getting rich, but if you really want to keep your emotions in control, you need to rely on why you have decided to invest, but also your investment process. The key is about tracking the process and making small adjustments throughout time. When you rely on the process that informs your decision-making, you’ve got a framework in which you can make better decisions. If there are conditions of certain stock that do not fulfill your process, it’s time to let it go. This means you won’t feel emotionally attached to your stock, and you won’t make impulsive decisions in the process.
Don’t Follow the Herd
There’s a lot of information out there that talks about immediate returns. Short-term investing is useful for those that want to make minimal returns but it’s not a foolproof plan to set up your dream home in Hawaii. You’ve got to stick with your intentions. Rather than opting for a herd mentality, go back to what your goals were and make sure they suit your current position in your life.
Many investors who start trading can feel like they need to get that little bit more out of their financial choices. The problem we can all have is that we just get more greedy. But if you want to be a clever investor, you should never feel like it’s a relationship that you need to prop up.