Invest Your Money- Not Your Emotions

Investing in your future is one of the best financial moves you can make. There is no argument that money well invested will serve you much better over time than the same cash equivalent placed in a traditional savings account or worse yet in a cookie jar. With that in mind, some people make the decision to avoid investing their hard earned cash. This is usually out of fear of the unknown or lack of information. Investments can be a tricky business, however there are some things that can make the process less intimidating. Here we will look at how emotions play a role in your investment strategy and which emotions and behaviors are better checked at the door.

• Greed- Everyone is guilty of this emotion at some point in their life. In the world of investments, greed can be the fastest way to the poor house. When you decide to invest your money, regardless of the type of investments you are considering, it is important to remember that there are no guarantees. For this reason you should weigh all of your options carefully and only invest money that you can afford to live without. Diving into the world of investments with the goal of getting rich quickly rarely works and in most cases results in greater loss than gains.
• Complacency- It happens more often than many investors care to admit. You choose your investment vehicle, set up your portfolio and then put your investments on auto-pilot. Yes, many financial experts recommend hanging in for the long haul, however in the current economy you must remain up-to-date with what is happening in the market. Does this mean you should jump in and out of investments? Not necessarily, for the most part investments are long term strategies that often weather economic cycles. This does not mean that you can turn a blind eye to events that are happening and in some cases make changes necessary to prevent further loss.
• Pride- You have taken all the right precautions and made educated decisions in regards to your investments. Despite all of this there are times when what you believed to be a good move turns out to be a mistake. When this occurs, do not let your pride stand in the way of making sound financial decisions. We all make mistakes, it is best to acknowledge them and move on.
• Fear- One of the more powerful emotions that leads to poor decisions in regards to investments. Fear of the unknown can stand in the way future growth. To overcome fear you must first learn as much as possible about investments. As you learn more (from qualified sources) you will grow more confident in your ability to make informed decisions about investment strategies.

It is natural for emotions to play a huge role in how your manage your money. After all, your financial situation determines your quality of life on so many levels, it is impossible to avoid the strong feelings associated with your financial health. With that in mind, smart investment decisions are most often made as a result of educated and informed choices versus those made in the heat of the moment.