If you have been an investor, one of the best lessons you would have learned is to be aware of your emotions while investing. Many times, emotions become self-enemy, especially when making crucial investment decisions.
According to studies, several emotions like fear, euphoria, hyperactivity, overconfidence, greed, and denial acts as powerful drivers behind investments. To avoid all the emotional investment decisions, it is crucial to follow a disciplined procedure. Below are a few tips to avoid emotions taking over money decisions.
Following a plan is the first and foremost step to make a right investment choice for reaching dedicated goals. A well-designed plan helps keep a track on progress for achieving long-term financial goals.
- Write Down Your Plan: Write down a well-structured plan in a write-up that includes long-term, medium-term and short-term goals. List out the strategies to achieve each goal, besides calculating the approach to risks and returns. This thorough plan should work as a steady guide
- Keep Tracking Your Progress: Review your portfolio regularly, but not too frequently. Regular reviews help make necessary changes to the portfolio.
- Be Patient: Be patient with your long-term investments to receive maximum benefits. Learn to focus on larger picture constituting financial goals and proper strategies.
- Talk To An Investment Advisor: An efficient financial professional offers you a perspective on market fluctuations and the right investments. Investment advisors like ArthaYantra act as fiduciaries with a commitment to the customers’ best interests. Meet your advisor to plan your finances and re-visit at least once a year to review the performance of your portfolio.
In conclusion, when making investments, it is important to follow a structured plan, track progress regularly, gets objective advice, and emphasize on implementing. More importantly, keep a check on your common emotions with a potential to cause investment mistakes.