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01. Sep 13:47
There’s no denying it. Investing is an emotional experience. After all, it’s your money and your financial future we’re talking about. But, keeping your emotions in check – and staying focused on a plan that’s geared toward your goals – can be essential to your long-term investing success. Surely, you can relate to this rollercoaster-like graphic. How many of these feelings have you lived through as an investor? Going through this cycle of emotions is natural. The challenge is how you react to the peaks and valleys, especially when the market dips – a lot. Consider the following: When markets are up, and life is good, you might ask yourself, Should I invest more? So, it’s also helpful to think about the reverse scenario. During the “capitulation” stage, when markets are down, you might ask yourself, Should I cut my losses and sell? It’s human nature to want to take action, but if you sell, you’ll be faced with a much different reality when markets eventually recover – and when “optimism,” then “euphoria,” reappears. In short, by removing yourself from the market, you risk losing out on the market recovery and positive gains. The true test isn’t finding the best time to buy or sell. It’s finding a way to look past the media headlines, push aside your instincts to act suddenly or emotionally, and stay true to your reasons for investing in the first place. Experiencing success and reaching your goals isn’t just about financial facts and figures. It requires a solid understanding of your instincts and behaviour. Keep these basics in mind, when you’re feeling anxious about your investments. Stay focused on your goals. If you’re second-guessing your plan, it can be helpful to revisit your goals. Ask yourself: Have my goals changed? Is my financial situation different than when I started? If the only thing that’s changed is the market, try to look past the short-term loss and focus on the long-term prospects. So, Control your feelings so that money does not control you!