facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

Take the emotion out of investing

A common mistake is to make decisions based on emotions. In good times, investors are excited, they want to invest more and often “buy high." When markets turn negative, investors become fearful and decide to cut their losses and “sell low."  

The investing emotional roller coaster shows what an investor may experience as their investment rises and falls. The key is to stay disciplined and committed to your long-term investment plan to avoid riding the emotional roller coaster. There are ways to manage emotions when you encounter uncertainty in the markets. Speak to your advisor – he or she can help provide the knowledge you need to help you stay focused on your long-term goals. 

Graph with curve that goes up above the zero line and then below the zero line, ending at the zero line. You start at optimism, go to excitement and thrill. When you reach euphoria, you say "wow, I feel great about this investment.". This is also the point of maximum financial risk and investors often buy at that point. Then from Euphoria, you go to anxiety and fear, where you feel like it's a temporary setback and you're a long-term investor. Then you go into the panic, capitulation, and despondency stages and at that latter stage, you want to give up and go into the money market. The point of maximum opportunity is depression and where the investors sell. After that, you go through the hope, relief and optimism stages until you go back to the neutral zero line.

Source: https://www2.manulifeinvestments.ca/rs/819-OWT-537/images/take-the-emotion-out-of-investing-en.pdf

© 2019 Manulife. The persons and situations depicted are fictional and their resemblance to anyone living or dead is purely coincidental. This media is for information purposes only and is not intended to provide specific financial, tax, legal, accounting or other advice and should not be relied upon in that regard. Many of the issues discussed will vary by province. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation. E & O E. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value. www.manulife.ca/accessibility 

Financial Advisor Websites by Twenty Over Ten Powered by Twenty Over Ten