When is it okay to let your emotions drive your investing?
“Hey Bryce and Ren!
One thing I’m curious about is, when is it ok to let emotions drive your investing decisions? For eg. My investing plan might say, buy ETF X because it’s my lowest holding and we want to get things even. But then ETF Y is trading 10% down for whatever reason. My brain says ‘stick to the plan’ but emotionally I want to get the bargain. With the volatility of the market over the last 18 months, it’s a question I’ve asked myself, many times. What do you guys think?”
Benn, Equity Mates Community Member.
Man, we’ve all been here, haven’t we? You’ve got your best laid plans, and then you spy a bargain. Whether it’s knick knacks you don’t need from Amazon, the good chocolate on special in the supermarket, or the ETF that for whatever reason that’s dipped down, it’s hard to reason.
The first thing to remember though is that although Ben thinks his reaction is emotional, in actual fact, he’s being completely rational. Thinking and assessing that something is cheap is a rational consideration. It’d be emotional if you were buying because everyone else is (herding), buying because you think you’re going to miss out (FOMO), or buying because you recently heard a podcast episode talking about it (availability). So Ben, you’re actually doing ok!
We dive into more elements of this question in today’s episode – asking ourselves if it actually is every ok to let your emotions drive your investing, and then we look at our own emotional risks and how we manage them.
Please, get in touch like Benn did! Shoot us your questions to ask@equitymates.com and you never know – we might make a whole episode about it!
Have you made an emotional stock market purchase before?
Make sure you also tell us the story!
What’s your investing strategy?
The other week we asked you to tell us how you invest!
Look, there’s no one-size-fits-all strategy. And of course, your investment approach should align with your financial goals, risk tolerance, and level of engagement. But, no matter what your style, we’ve got fun episodes you need to dig into!
Set and Forget: The One-ETF Investor
Only a couple of weeks ago, Equity Mate Dylan asked Ren and Bryce to go through a bunch of ETF options if you were to invest in one ETF only for the rest of your life. So if you’re in the portion of our audience who are low maintenance and prefer the simplicity of Dollar Cost Averaging (DCA) into a single, broad, global index ETF, start here: What’s the one ETF I should invest in for life?
The Curated ETF Portfolio
So you want diversification, but you don’t want overwhelming complexity. That’s ok! This segment opts for a more curated approach, holding a handful of ETFs that cover various indexes. Our recommendation? Get into our Under the Hood series! In one episode we unpack the Betashares Australia 200 ETF, consider ETF overlap, or actually understand how you might narrow down your choices in the first place!
The Core and Explore Approach
This is where most of you sit. You love balancing a strong core, and dabble around the edges with some thematics and stocks that interest you. You probably got in the door with our Get Started Investing series, and now join Bryce and Ren every Monday as they chat through their portfolio. So what should you get listening to? Make sure you’re checking if those thematic ETFs have staying power, and won’t run out of puff, and make sure you have a well-defined core.
The Eclectic Mix
If you’re in the group who’ve admitted to having a “messy” portfolio, well, now might be the time to reset! Dig into the beginning of the Get Started Series, reassess and realign your investment strategy. Or, send us an email through ask@equitymates.com and we’ll put your dilemma to an expert!
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