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Essay on Investment Behavior

invest in your futureOur life is full of mistakes we tend to make anywhere anytime, even dealing with investment. Even though we are free to make use of the ultra-modern techs, there is still no person on the globe, who can do it right no matter what. This is because of an uncertainty that is an integral part of the investing. Besides, investing includes a certain scope of emotions, especially when it comes to the money that has been the product of many years of solid discipline and hard work. We will discuss some of the most common mistakes that investor’s behavior may include.

Emotional Decisions

Decisions that one makes by emotions will most likely bring disastrous consequences. For instance, when you, as an investor, purchase an investment that rises later, you may strongly believe that you were sure everything would happen exactly like that. On the other hand, in case the investment drops off, you may convince yourself that you had a sort of the sixth sense that everything could go that way as well. These switches are because our behavior has a special tendency to assemble our thoughts and ideas so that they could fit the moment.

Impatience

Investing requires a businessman to be solidly patient. Without a doubt, making a rush decision will lead to a range of troubles. We all have been taught by the society that every decision brings an instant gratification. Unfortunately, both – life and investment do not work like that. When the question is about the investing, you have to be prepared to stay patient and wait to maximize the returns.

Invest when It’s Safe

After a major loss, almost every investor has a solid fear to carry on with his business. He prefers to sell his losers and then wait till the moment they think it’s safe to get back on track. But the point is that by the time they think it’s the right moment to invest in stocks, as a rule, it’s after stocks have largely risen. Although it’s best to perform investing when the prices are low, the majority of investors are afraid of reentering the market after such a major decline. This illustrates the other big mistake that is caused by emotions. In order to avoid this, make sure to have your own set of rules that curate, when you should sell and when you should buy.

Obviously, there’s a bunch of the other mistakes you will make the other day. However, the ones described above are some of the most common within the market. To avoid your mistakes, make sure to stay patient and even if you don’t feel like that at the moment, do your best to adopt the viewpoint that goes in contrast with your own. To be clearer, never listen to the crowd. Taking into account the fact that investing requires too much emotion, a lot of investors tend to delegate their duties to the skilled advisors. This may be a good option for the individuals, who lack self-confidence.

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