Controlling your emotion can be really tough, especially in a volatile market. During all those times, there are constant news and fear running around the market telling you to sell before the next epic market crash. It is hard not to keep emotion under control during this tremulous time. Therefore, we will need to look at How to Control Emotion when Invest
My Experience that lead me to control my Emotion
I was a day trader before I learn to start investing as I was bought into the idea of buy low sell high and I wanted to make an instant profit. I spend my morning reading and watching the news to watch any market updates and listen to other traders for their upcoming trades. In the afternoon I spent reading up on day trading and preparing for the trades at night. At night when the stock market opened, I placed all my trades and watch for the next 2 hours. You can guess how much of an emotional roller coaster I went through just looking at the screen the whole day. It was not healthy for me at all, I was not able to sleep well and have develop anxiety every minute to keep a lookout on the stock market.
Needless to say, I quit day trading and started investing for the long term so I would not be bothered by day-to-day market volatility. At the same time, I taught myself how I should control my emotion and be patient when investing. This has led to me becoming a better investor and being able to achieve a net worth of over $100,000 by age 24.
What the stock market won’t teach you when investing
I wish someone were to taught me this sooner before I first started investing to get my mind on the right track. After learning to invest my money over the years, I develop an understanding of core principles every investor will need to know about investing. Here are a few principles every retail investor needs to understand before investing.
Financial institutes will never teach you how to invest. That is their bread and butter.
Financial institutes such as banks, insurances company, and brokerage firms will never teach you any advanced level of understanding of investing. There is nothing in-depth you can learn from financial institutions, most of these companies work on earning from investors investing in them or earning their money through commissions.
News media make money from clickbait titles, they will keep instilling fear in the market
SELL NOW! Dump this stock! This is a losing business!
We have all heard of these in the news media all the time making bold predictions to sell your investment now. It’s important to know that fearmongering is one of the news media specialties, fear is one of the greatest ways to garner click-through rates. This is why many news media are using it.
“Investing” Youtuber will sell you the Idea of the Next Big thing to create viewership
Google and Youtube do SEO (Search Engine Optimisation) where they rank content based on a number of factors. Having a clickbait title by adding superlative words such as “best” or “greatest” does help to increase authority in the ranking. That’s why in the Youtube finance space, it’s quite common to see these “professional investors” sharing their opinion on the next greatest or biggest thing. These Youtuber hope that by constantly creating these so-called “best” content, they would be able to garner more viewership so that can make more money.
While it is okay to hear what others are doing with their money in investing. As an investor, learning to do proper research and understand the business is the key to being a successful investor.
No one cares more about your money than you do
Online scams have been growing in recent years, especially with the growing interest in cryptocurrency. As they always say, scammers go to places where it is the easiest to scam. It’s simple to assume that those who lose money are just unlucky losers. That isn’t always the case. Frequently, they are regular people like you and me who are persuaded that someone else is more knowledgeable than they are.
If you would like to take better care of your money. Start by doing proper research and understanding where your money is going.
Money-making is hard
Fake gurus aim to catch fools to follow. The ways these gurus portray themselves as wealthy, throwing money around like nothing, driving nice cars, or showing their homes are ways that catch the attention of their audience. I mean who doesn’t want to be rich right? To make the bait enticing, fake gurus often sell their personal course or tool that they say would “guarantee” you to get rich. These are commonly known as get-rich-quick schemes.
There are no easy ways to reach financial freedom or true wealth in a short period of time. In the context of winning a Powerball Jackpot, your odds are 1 in 292million, good luck with that! Let me know if you have won!
If you are a long-term investor, you would know that money doesn’t fall from the sky. It takes a lot of hard dedicated work, investing it month after month, year after year to see significant results. Money-making is hard. No one ultimately will guide you on how to invest your money. You decide on how you wish to control your money.
If you are unsure how far away are you from financial independence. Do click here on learning the 7 steps to reach financial independence. And no you won’t get rich in 90days, rest assured 😅!
Tips and Tricks to control Emotion when Investing
Learning from my countless mistakes when investing. I hope to provide some tips and tricks to control your emotion from affecting your decisions when investing.
Cut down on Watching the News
As mentioned, the news media specialized in emphasis on fear tactics to draw their audience. Therefore, all you need to do is simply turn off the news and watch another channel.
Think about your investment horizon
This should be a no-brainer but there is still a need to remind others. If you are investing your money, you need to have an investment timeline horizon and conviction in your investment. Or else you would be easily persuaded to sell your investments that may recover had you not bothered.
Go out and get a breather
Sometimes, the best investment strategy is not doing anything. This is why the best investor is ones who are either dead or inactive. If you are feeling too emotional when investing. It is probably time for you to be going out and get a breather.
I quit day trade because ultimately even though it was good money, I was sacrificing my health for money. That was the last thing I wanted when I am able to financially retire but have to deal with multiple health problems. This is why I learn to prioritize my mental and physical well-being, reminding myself the importance of health is wealth. Money can buy almost anything, but it can’t buy you time or health. Know your reason for financial freedom, and never lose sight of the small things you love. Whether it is going for a jog, short travels oversea, or having fancy dinner with loved ones.