Protecting your investments from emotional decisions
Many investors struggle to keep their emotions in check when making investment decisions. After all, we’re human beings; our instincts often dictate our behaviour, even in the face of hard facts and rationality. These four strategies can help you to avoid making impulsive decisions and keep your financial plan on track.
Keeping your emotions at bay when making investment decisions can be extremely difficult. Research from the U.K. found that half of all investors had made an impulsive investment decision, with two-thirds of them later regretting that decision. Fear of losses, excitement and the fear of missing out were all listed as some of the reasons for making these impulsive decisions.
Behavioural economics examines how our biases and emotions can affect our investment decision-making process, which in turn can lead us to act irrationally. When it comes to preserving the value of your investments, understanding these behavioural tendencies can help you to make better investment choices and avoid costly mistakes.
Let’s explore four key behavioral economics traits and the impact they can have on the value of your investments.
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Written and published by Bailey & Associates - IG Wealth Management as a general source of information only. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Advisor.
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