Your Behavior Can Impact Your Success
The dominant determinants of long-term, real-life, investment returns are not market behavior, but investment behavior.
— Nick Murray, Author
For most of us, money is bound up with powerful emotions such as security, confidence, and even, sometimes, fear. But the emotions of investing can cause us to lose focus on important areas of our life, most of which have absolutely nothing to do with the stock market.
We know that remaining patient and disciplined can be extremely difficult, especially when markets are soaring or plummeting. The way our brains are hard-wired can cause us to make emotional decisions about our money at precisely the wrong moments.
Many investors tend to “buy high” and “sell low.” Markets are prone to sharp and erratic movements, which can cause investors to sell at inopportune times. Conversely, during a strong bull market, investors often rush into the market because they feel “elated” and buy at the peak. Ultimately, this kind of emotional, short-term behavior can compromise your portfolio and your financial plan.