Successful Investment Series #3 Check Your Emotions at the Front Door!

in #investing7 years ago (edited)

Emotions are one of the biggest killers to a good investment! 

  • Our emotions have a clever way of weaving their way into our financial decisions. 
  • Everyone likes to think they have their emotions under control, but do you really?



This post lays out the emotional roadblocks I use to check my emotions at the front door.


Roadblock #1   "Forget about pride"

  • Pride and investing have no room for each other.
  • If you want to be a successful investor you have to recognize and accept the fact that you will not always come out ahead. 
  • A successful investor is someone who can recognize their losses, exam their mistakes, and not let their pride affect their next move. 
  • The ability to move past your losses will greatly determine your ability to be a successful investor or not. 


Roadblock #2  "Don't get attached"

  • Staying emotionally detached from an investment that has given you good returns over the years is easier said than done.
  • You must remember to continually evaluate each of your investments based on their merit in your portfolio and not on your past relationship.  
  • If you find yourself struggling with this one, you may want to consider seeking the advice of someone you trust or a professional investor. 
  • Similar to breaking up with someone you have been dating for a while, but you know is toxic. You just need a few friends to help build up your courage before you break it off. 


Roadblock #3  "Forget about everyone else"

  • The all mighty powerful "FOMO" (Fear of Missing Out) has a lot of sway over many unprepared investors. 
  • FOMO can generate itself from recent media hype, or your friend telling you that you have to buy this before its to late. 
  • Do not fall trap to the FOMO.
  • The best way to fight FOMO is to educate yourself on the situation, looking at it from all angles as to help you not make rational decisions.


Roadblock #4  "Know yourself"

  • The most important road block in checking your emotions at the door is to know yourself.
  • You must constantly self analyse. 
  • Am I in a good mood today? Is that affecting my decisions? Should I workout and then come back? Should I push through? Should I take a break?
  • Knowing yourself and being honest with yourself is the only way that you will make it in the long run as a successful investor. 
  •  You have to be able to look back at your day, week, month, year or more and ask yourself what you could have done better? What you did well? What worked and did not work?


Roadblock #5  "Use a professional"

  • Having someone in the middle of you and your investments helps keep you from making poor investment decisions. 
  • Professional investors do this for a living and have seen the ups and downs and know what should be done. (Be aware of those who are pushing you into high fee investments)
  • They can offer comfort and reassurance when the markets are in turmoil. 
  • I recommend using a professional investor if you do not feel that you can successfully complete the above 4 road blocks on your own. 


Key Points 

  1. Pride will only loose you money in the long run.
  2. Use critical analysis to help you stay detached from poor investments. 
  3. Forget about what everyone else is doing and go with what you know is right. 
  4. Constantly reevaluate and self analyse. 
  5. If you can not complete the above 4 steps on your own, use a professional. 



If you enjoyed this you may also enjoy my first two posts of the series. 

#1.) https://steemit.com/investing/@elderfinancial/successful-investment-series-1-importance-of-goal-setting

#2) https://steemit.com/money/@elderfinancial/successful-investment-series-2-forming-financial-habits


Thanks for reading! 


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This is 100% the reason that I have all of my investments in automated trading company Wealthfront. I know that I would not be able to hold through downturns and such so I outsource my worry and therefore have no stress about it. Highly recommend others take the same path.

Agree to agree on that one. Thanks for reading @brandonp, and best of luck on your investments.

I think that everyone must experience a big loss of capital to learn controll of emotions. I lost once 80% of value of my shares and since then my trades are less impulsive and cold calculated.

Calculated is the best way to be! We all make mistakes, it's just a matter of how big and how often. Through using these roadblocks can help you minimize your risk.

OR learn from others mistakes. Do not buy on impulse. Real Estate and Cryptos is a game of NO FEAR, if the numbers work out RE real estate, then go for it. Cryptos is like vegas, Do your homework, See who has a strong community.

meep

Thanks meep! Its truly an honor to have you meep my page:-)

hahahahahah😂😱👻 Ijust died laffin ^_^

Check out meep's page! Pretty dope stuff!

Yea @meep is a rare breed...actually was the Second Comment I received joining steem this week lol...

And a mighty good one to receive!

VISION, it's really about " what can be ", Some of the biggest profits are in buying something mismanaged and getting it in line with what it should be. Have a vision, I've bought places that people wouldn't because a room was painted red or $300 in drywall needed to be repaired. JUST be willing to see things for what they are. A vision and elbow grease is usually the main recipe for success.

Great point. You absolutely need to have a vision of what you expect it to be no matter what the investment is in, including yourself!

I agree with your posting. If you can set aside your emotions and look at the data or charts (hard data), you can make a better decision on your investment. Especially, when FOMO start taking over.

FOMO is a real b****, no doubt about it!

I get it all the time with crypto currencies. FOMO is runny rampant nowadays. ; - )

It does not have to be if you do not allow it!

That why your article hit a core with me.

You know one of the best ways to lose money when it comes to investing?

Its putting your emotions at the front of the line

You wouldnt believe how MANY people buy property or stocks or even cryptocurrencies with their feelings or "their gut" tells them to. I always tell people to make sure to run the numbers to make SURE that they know what theyre getting themselves into....

literally 5% or less listen, so many people want the money quick and easy and they think their solution that has been in their heads for 15 seconds is the best option

I could not agree more! In my experience of those who are willing to listen most either act irrationally or do not act at all. The answers are out there, you just have to put a little work in for it. Thanks for reading @moderninvestor.

I totally agree with your opinion. Control of emotion seems to be learned from investment experience.

Exactly! Sometimes experience can be costly.

I think someone can hardly intentionally control or behave in a situation as "he should" because sometimes we react instinctively.
I think this is a matter of experience and time spent learning such things.

Excellent post!

Thanks, @ronhilda. I completely agree. The more time and experience the less thinking that is involved.

Cant agree more!
This is why I will always recommend passive index funds as the core of any portfolio.

KISS - Keep It Simple Stupid

Yes Attached and Emotions have kept me from being extremely successful in the CryptoSpace as its my first time in the markets...but I love it..Thanks for being here @elderfinancial and thank you for commenting on my post...if you need some Logo or Art work videos..i might be able to assist you..don't be afraid to ask...

That is why having a plan and a goal for your investments are so vital. By having both of those they will help you curb your emotions when things get hard. Thank so much for offering your services. I really appreciate that, I might just have to take you up on that offer. I do need a Logo don't I.

These are 5 great tips @ElderFinancial! Thanks for that. I can definitely relate to them. The pride one is sometimes the hardest to get over. But when you haven't made it big yet, you simply have to get into the trenches without the weight of your pride!

You can check out @ENAZWAHSDARB for the best Entrepreneurial content! If you appreciate what you see, you can leave a follow! :)

Glad to hear you got something out of it. I will definitely check it out. Thanks

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