Sometimes the emotions of investing can cause quick reactions, following the trends—which isn't always the most successful.
The Liberated Wealth® Process helps us uncover and solve big and small challenges. Sometimes these are common issues and opportunities for wealthy families, and sometimes they are unique.
Unique opportunities can include emotional investing that can happen with trends and quick reactions. But there are ways to implement room for risk and create a diverse portfolio that can sustain for generations.
Understand The Motivation
The psychology behind quick judgments reveals a lot about human nature.
Just like there are stages of grief, there are emotional stages of trading and wealth. Committing to a snap decision with a high-risk can bring a roller coaster of emotions: excitement, hope, anxiety, fear, panic, and relief (if all goes well). This is true for financial planning in general.
Investor behavior has been the target of many studies because investment (even when unwanted), is powered by emotions. Ask yourself some of the following questions about your potential investment:
- Why am I investing?
- Does this align with my long-term goals?
- Can I pivot my wealth if this fails?
- What do I want in life and does this decision support this?
Setting Goals Instead
Implementing long-term goals is always a good idea, especially when you might have a history of pulling the trigger on quick investments that failed. Dollar-cost averaging and diversification are two approaches that investors can implement to make consistent decisions that are not driven by emotion.
Life is About Balance!
At the end of the day, finding a balance of overconfidence and underconfidence might find you not in the sweet spot of the exhilaration of investing, but the confidence of having sustainable wealth.
And better yet, there is a tangible way to measure balance—a diversified portfolio!
Talk to one of our trusted wealth advisors today at Centura Wealth Advisory to learn more about liberating your wealth!
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