Be Objective With Your Investments

When traveling down the right investment path, you must be objective with your investment decisions.  That means making decisions without emotions.  The best way to do this is to look at your portfolio as if you were a financial advisor, or giving advice to a friend.  This sounds easy but emotions run deep when money is involved.  We’ve often found ourselves making rash investment decisions because of emotions.  Here are some tips on how to stay objective with your investments.

• If you lose money on an investment, don’t buy more.
• If you make a lot of money on an investment, don’t buy more.
• If the market gets volatile, don’t sell all of your investments.
• If the market gets euphoric, don’t buy the hype.
• Don’t buy a stock because you like the company.
• Don’t buy stocks without doing your research first.
• If you get angry or upset because of investing, don’t make any trades until you’ve cooled off and thought about your decisions objectively.
• Tell your spouse or close friend about your portfolio strategy.  Often, expressing your strategy outloud can help you answer your own questions about your investment portfolio.

In summary, don’t let emotions control your investment decisions. If you lose a bunch of money on a stock, don’t buy more. If you have an investment that does unbelievably well, don’t buy more. Look at your investments like an outsider would do and ask yourself if you have a balanced portfolio that meets your investment goals. When angry or excited about your investments, don’t make any decisions. Wait a few days or weeks and look at things objectively before making any investment decisions.  Follow these rules and stay objective with your investments.

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