by Webmaster, 28th April 2022
Don't be driven by your emotions when making investment decisions
We are all driven by our emotions – often, more than we’d like to admit, as emotions are key drivers of behaviour. While we know we shouldn’t let emotions or impulses drive our investment choices, it's sometimes too tempting.
New research reveals 50% of British investors admit to making impulsive investment decisions, with 67% of them regretting it.
What influences these decisions? Social media tops the list, with 32% citing it, closely followed by friends (31%) and fear of missing out (30%).
A third (34%) made impulsive investment decisions whilst excited; a fifth (21%) when feeling impatient and 62% felt a need to constantly monitor their investments to succeed, leaving them prone to reacting to short-term market fluctuations.
A DIVERSIFIED PORTFOLIO
An emotional connection to your investments isn’t necessarily a bad thing, especially if you use it as a tool to invest in funds you feel enthusiastic about.
However, when feelings start to cloud decision-making, it’s time to take a step back. By understanding your emotions, it’s easier to manage them and create a diversified portfolio that takes advantage of market opportunities and can weather any storms.
Many investors enjoy the thrill and excitement of investing. A compromise they can make is adopting the ‘core satellite approach’. This means money is invested in something stable and less exciting, and a small, satellite, component of investments offers more enjoyment, keeping the investor engaged, and providing an emotional reward without causing you to make decisions you may regret.
The above was provided by Hartey Wealth Management Limited. Registered office: Hilliards Court, Chester Business Park, Chester, CH4 9QP. Tel: 0808 168 5866. www.harteywm.co.uk Hartey Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority