web analytics
January 28, 2015 / 8 Shevat, 5775
 
At a Glance
Blogs
Sponsored Post


Stop Losing Money as an Emotional Investor

Having an objective certified professional oversee your investments is the best way to prevent yourself from falling into the trap of emotional investing.
Emotional Investor

One of the reasons why many investors fail in their investments is because they are driven by their emotions. This problem is studied by academics who specialize in an area known as behavioral finance.

People make decisions for all sorts of reasons, but when you make an investment decision based on emotion, not fact, you stand to lose your head, heart, and pocketbook.

For example, sometimes investors hear some positive news about a certain stock and they rush to buy it simply because they feel good about it. They haven’t necessarily researched its individual merits, or checked it against their financial plan to see if it fits with their overall investment goals. They just make a sudden investment decision.

Have you ever done that?

Many investors are driven by fear or excitement, and in both cases their surging adrenaline may help them in a “fight or flight” situation, but not with their investment portfolio.

If an investor is too fearful, he could end up either selling a stock needlessly or not developing his investment potential enough. But sometimes investors don’t have enough fear and they become the victims of Ponzi schemes and other scams.

I recently spoke with Professor Meir Statman, author of What Investors Really Want, on the Goldstein on Gelt show, and I asked him why he thought people let their emotions get the better of them. He replied, “People follow their intuition, and their intuition says that they can tell the difference between honest people and dishonest ones. Dishonest people take advantage of precisely that.” (Click here to hear more of what Professor Statman has to say.)

In the ideal world, investors have the time and resources to take a step back from their emotions and properly research financial moves. But in the real world, who has the time, financial background, or desire to educate themselves properly before making rational investment decisions?

What’s the solution for avoiding the pitfalls of emotional investing?

Find an effective and reliable financial planner. A financial planner has the knowledge and background necessary for researching and assessing various investments and finding out which ones are the most appropriate for you and your financial goals. For this reason, it’s worthwhile taking the time and calling your financial planner today.

Having an objective certified professional oversee your investments is the best way to prevent yourself from falling into the trap of emotional investing.

About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning and investment services firm located in Jerusalem. He specializes in working with clients who live outside of the United States and want to maintain a U.S. brokerage account. Doug’s newest book, co-authored with Susan Polgar, about how using chess strategies to improve your finances, Rich As A King can be purchased at www.richasaking.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Contact at doug@profile-financial.com


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “Stop Losing Money as an Emotional Investor”

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
The IAF reportedly hit a Syrian military target in Damascus around midnight.
IDF Retaliates Against Syrian Military Targets, Sets Off Rocket Alarms on the Golan
Latest Blogs Stories
Doug Goldstein

Distinguishing between manipulating and influencing people + 3 steps towards positive communication

Netanyahu wants more room on the table for the military option to stop Iran from obtaining a nuclear weapon.

Despite “excuses” about not wanting to influence Israel’s election Netanyahu’s views should be heard

palestineRecognition6001

Israeli leaders deny reality: Nothing we can do will make the Arabs accept a viable Jewish state

Auschwitz Entrance

How do we make sure the Holocaust is relevant to new generations?

In 2006, Amona kids saw their teachers and rabbis being thrown from windows as if they were garbage

No money should go to terrorists or their families; anyone involved in terror must pay the price

Responsible Jewish outreach encourages BTs to retain and to enhance their relationship with parents

Israelis will vote for Likud because of Caroline Glick, but she’ll just be Right window dressing.

What are the dynamics of running a family business and what are its impact on family relationships?

The Hareidi paper HaMevaser wanted to have their cake and eat it too: use the photo; lose the women

Producer Chuck Wang explains how you can learn from mistakes and move on towards success.

Chareidi women who want to run for political office don’t suit the full definition of “chareidi.”

France inviting Abbas to the “anti-terror rally” makes me doubt it takes Muslim terrorism seriously

How could a Jewish family hide on the 3rd floor of a hotel where the Germans were on the 1st floor?

No Charedi leader has suggested a change that would make a difference to a failing paradigm

What is the “rookie mindset” and what can new trainees offer to the workplace?

More Articles from Doug Goldstein, CFP®
Doug Goldstein

Distinguishing between manipulating and influencing people + 3 steps towards positive communication

Doug Goldstein

What are the dynamics of running a family business and what are its impact on family relationships?

Producer Chuck Wang explains how you can learn from mistakes and move on towards success.

What is the “rookie mindset” and what can new trainees offer to the workplace?

What is the “latte factor” and why do women need to be in control of their finances?

In our first podcast for this week, 4 healthy money habits that you can adopt.

Can you trust your children to run your finances when you get older?

How does humor help you reach out to your clients and succeed in business?

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/stop-losing-money-as-an-emotional-investor/2013/05/02/

Scan this QR code to visit this page online: