KredX Blog KredX Blog
  • HOME
  • PRODUCTS
    logo

    FOR BUSINESS logo

    logo

    FOR INVESTORS logo

    Invoice Discounting

    Unlock money tied up in unpaid invoices

    KNOW MORE

    KredX Pay Later

    A closed loop financing for your dealers/distributors/Retailers

    KNOW MORE

    KredX Cash Management Solutions (CMS)

    Get real-time analytics. Manage disputes. Minimise risks. Get risk-free returns

    KNOW MORE

    KredX Global Trade

    Get Quick Finance To Fund Your Import-Export Requirements

    KNOW MORE

    Invoice Discounting

    Diversify your portfolio with alternative short-term investments

    KNOW MORE
  • PARTNER WITH US

    Business Partner Program

    Accelerate your client’s business growth and get attractive payouts on time

    KNOW MORE

    Financial Advisor Program

    Grow your credibility and clients’ investment portfolio

    KNOW MORE
  • KNOWLEDGE CENTER

    FAQs

    Blog

    Knowledge Base

    Webinars

    Reports

    WhitePapers

    Podcasts

  • COMPANY
  • LOGIN / SIGNUP
  1. Home
  2. Finance Planning
  3. 5 Emotions That Can Harm Investments
 5 Emotions That Can Harm Investments
Finance Planning Investor

5 Emotions That Can Harm Investments

by KredX Editorial Team November 18, 2019 0 Comment

Investors often find it difficult to differentiate between emotions and logic when it comes to making crucial investment decisions. While there’s no harm in paying heed to emotions, investors should be cautious about not giving them a chance to drive investments. 

Circumstances like panic selling during a volatile market, over-investing in a specific asset-class, succumbing to Ponzi plans are some of the instances of emotions getting heavy over investing basics and bringing about poor results. Investors need to make peace with the fact that market highs and lows are meant to happen. Hence, panicking during such times will only adversely affect their portfolio. 

As quoted by Warren Buffett, “Fearful when others are greedy and greedy when others are fearful”. Keeping in lines with the above thought, here are the top 5 emotions that frequently drives investor decisions.

Fear

Fear and apprehension are the two fundamental human emotions that play a key role in driving investment decisions. They push investors to take radical decisions during a market downturn. Investors must realise that it is absolutely normal to control and eliminate risks; however, they should never let fear affect investment decisions. The fear of losing money can become grave and lead to stalling and missing out on opportunities that will never return. Fear can be evaluated, controlled, and disposed of as long as the investor is aware of it and takes the time to investigate its source.

Uncertainty 

Any investor will reveal that uncertainty is a constant factor when it comes to investment. Always remember that the market is meant to undergo bearish and bullish phase, and shifts can happen anytime. Uncertainty is embedded in the very idea of financial investment. However, on an emotional level, it can hamper the nature of the decision. As a general rule of thumb, investors should never re-think a choice they have made, as uncertainty towards their own ability will prompt a weak investment portfolio.

Greed

Greed is another emotion that often drives investor decisions. The feeling of pushing money when the market is plummeting is proven to be a costly strategy since the investor is purchasing at a high price. They should remember the fundamentals of investing – buy low and sell high. 

Depression

Depression plays a crucial role in emotional investing, as investors tend to remember their failures as compared to their successes. Investors usually get depressed when their investment bottoms out and tend to pull out funds. While investors might feel like they’re safeguarding their bags, in actuality, they are missing out on great opportunities. It’s essential to identify when to play the market; wins are usually bigger than losses.

Optimism

Optimism is the feeling of being hopeful that eventually, things will turn around. However, excessive optimism can drive investors to stick onto a non-performing asset for a long time in the hope that the best is yet to come. Being overly optimistic will lead to a diminishment of the investment value. In case an asset has been continuously under performing, it is advisable to take a one-time blow and exit instead of making further losses in the hope that things will turn out to be better. 

As a matter of fact, overconfidence in a particular asset class can also gravely affect investment decisions. For instance, many investors consider real estate and gold as an evergreen asset class that deliver excellent returns. However, data depicts that the 10-year yield of gold is just 8.3% at this point. Whereas, returns from real estate means investing in a bottomless pit.

Conclusion

Behavioural patterns and emotions can have a huge impact on one’s investment portfolio. Emotional intelligence plays a crucial role in making or breaking an investment folio, and investors must take time to harness it to their benefit. The essence of being successful as an investor is to be able to identify the right opportunities and pursuing them to get a holistic result.

Share This:
Tags: high returns at low risk investment decisions investment options investment plans Investment Portfolio investments safe investment with good returns Short term investments
Previous post
Next post

KredX Editorial Team (Website)

administrator

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Enquire now

  • Invalid value

  • Invalid value

  • Invalid value

The Best Of Alternative Investments, Now On Your Phone

Download App:

KredX Blog KredX Blog

Wing ‘A’, Ground Floor, Office-1 Block-‘A’, Salarpuria Softzone, Bellandur Village, Varthur Hobli, Bangalore South Taluk, Outer Ring Road, Bangalore – 560103

+1 212-602-9641

info@example.com

Get More Location

Follow us:

Download app:

Company

Home
About Us
Careers
Contact Us
Our Offices

Resources

Blog
Reports
Whitepapers
Knowledge Base
Podcasts
Webinars

Support

FAQs
Talk To Our Advisor
Chat With Us
Sign Up
Login

Legal

Nodal Officer Name: Amrutha A / Ph: 08061799200, IVR-9 / Email: Amrutha@Kredx.Com
Terms And Conditions
Privacy Policy

Investor Products

Invoice Discounting
Bonds
Digital Gold/Silver
KredX Assured

Business Products

Invoice Discounting
Buy Now Pay Later
KredX Cash Management Solutions
KredX Global Trade

Quick Links

Business Partner Program
Financial Advisor Program
Business Suite
©2022 Minions Ventures Pvt Ltd