If we could all put our emotions on completely on hold, we’d become better investors. The logical, smart decisions are often the complete opposite of where our feelings lead us. But since we’re all human, this can seem like a tall order at times.
However, there are some simple ways to keep you emotions in check and make better investment decisions:
Don’t lose your sense of history
The best defense against irrational emotions is cold, hard facts. One way this can be accomplished is by looking at historical data of the stock market when your emotions are going haywire. When your emotions are screaming out to sell during a downturn, you can maintain your compass for successful investment decisions by viewing the stock market’s previous recoveries.
Get away from it all
The media exists for viewership and ratings, and the best way to accomplish that is by tugging at people’s emotions. Ironically, staying informed often leads to poorer investment decisions because of this. If you have a long-term investment plan, being glued to daily stock market news will do nothing except tempt you to throw your plan off.
Don’t fall in love with your investments
Often, investors will get emotionally tied up with a few concentrated investments. There are many reasons for this – your grandmother gifted you the stock, you work at that company, etc. – but they all lead to a similar detriment in your investment decisions.
By utilizing a diverse investment portfolio and focusing on a healthy asset allocation, you can avoid the heartbreak and poor decisions associated with concentrating on a few investments.
Using a trusted advisor to make better investment decisions
One of the biggest benefits of a financial advisor is the ability to have someone who isn’t emotionally tied to your investment decisions. As fiduciary advisors, we’re legally obligated to make rational decisions that are always in your best interests at LexION Capital. We’re happy to serve as advisors for our clients when their emotions are leading them astray. If you’d like to learn more, don’t hesitate to contact us today.
