⚡ Dealing with customers' emotions is the most difficult aspect of my job as a Financial Planner. 😒
👉 Greed & Fear are 2 emotions that can have a significant impact on an investor's decision to buy or sell. This is coherent with their financial behavior.
⚡Every individual has a mindset that is shaped by their beliefs, previous experiences, knowledge, thoughts, feelings, surroundings, and perceptions.
When emotions take precedence over logic, it can result in poor investment decisions and affect financial outcomes. ❌
It's natural to feel greedy/fearful during a bull/bear market, but it's important to stay aware of these emotions to avoid making impulsive decisions. ✅
📌️ This problem arises when people are unsure of their financial goals/targets, unlike a vacation trip, where we are certain of the journey plan.
📌️ Second, we're all pretending to be investors. In reality, we all have a trader inside looking to speculate in order to maximize the profit in a short span of time. The urge for profit is so strong that we don't hesitate to leverage it.
And, guess what, the stock market is supposed to be the easiest, most transparent, and legal place to speculate. Even today, many individuals consider the stock market as a casino.
📌 There is nothing wrong with trading. But, can you afford to bet everything on trading? That is not the case!
💎 The allocation towards investing and trading must be defined.
💎 To counter emotions, investors should keep a long-term horizon, do proper research, and follow their financial plan rather than getting caught up in short-term market movements and surrounding noises.
Nonetheless, during times of euphoria or market crash, people put asset allocation on the back burner. They actively indulged in panic buying or panic selling. ❌
✔️ This is where financial planners can handhold their clients to avoid drowning in the flow. Seeking professional advice is always advantageous.
Which emotions do you experience the most when dealing with Money?
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