Are you an emotional investor?

Are you an emotional investor?

- Posted by Graham Elson on September 11th, 2017

Managing and monitoring your investment portfolio can sometimes be difficult. With many decisions to be made and lots of factors that may influence these, understanding the balance between risk and return and not letting your emotions get the better of you may be key to achieving your investment goals.

The emotional blind spot. Elson Associates - Online Investment Management.

According to a survey recently carried out by Investment News, it was found that people generally reached the consensus that if they could stop themselves from making emotional decisions, they would be more likely to achieve their investment goals. Moreover, after some discussions, we decided that some of the most common mistakes made by emotional investors include the following:

  • Failing to manage return expectations with risk tolerances
  • Making hasty decisions when market stress is present
  • Assuming that a unique advantage adds up to greater benefits

So how can these be avoided?

Studies show that investors across the globe have an optimistic outlook or projection for their investments, with expectations being significantly higher than are considered realistic by financial professionals. Needless to say, unrealistic expectations can upset the most well-thought-out investment plans so for the most part, managing your expectations could help manage risk.

Financial professionals see risk as measurable and quantifiable but this is not always the case for investors who often see risk in more absolute terms. Questions that spring to mind in periods of market stress are: will I lose my assets? While this could also be considered realistic, it's important that you establish goals, rather than returns and your portfolio decisions should be made with your risk tolerance in mind. Why not ask yourself the following question: What is your personal definition of risk? This will help you establish SMART goals as well as helping you understand what risk is and how is can affect you.

Remember, the value or income of investments may go down as well as up but through a well-managed portfolio and regular investing, you can ride out the highs and lows of the stock market and you could be well on your way to achieving those goals that you initially set out.

At Elson Associates, we like to make your online investment management as hassle-free as possible. We understand that our clients are not only looking for Investment performance but they also want insight, which is why we work tirelessly to provide you with the most up-to-date information on all the funds that are available to you via our platform.

We also understand that, sometimes, investment terminology can be overwhelming so we update our offering to help you make the best decisions for your portfolio. One example of this? Check out Leaders, Laggards & Losers, which provides you with clear information on which funds are over and underperforming.

Although we do not give advice, our range of services can help you achieve your investment goals at a lower cost. If you would like to learn more, then contact us today on 0800 0961111.