your investments must satisfy both your financial and emotional needs.
When your investments are lucrative, but you and your investments are not
emotionally compatible, you will either get rid of them and look for something
new and possibly more incompatible or stew in your misery. Yet it is
difficult to even know what your needs are in this relationship.
You are subject to great cultural pressure today to own U.S. stocks,
especially the latest fad stocks. It is not just that everybody at the office
claims to own them and is checking the results online all day. There are
whole institutions devoted to this: CNBC, The Nightly Business News, The
Wall Street Journal, a thousand Web sites, and chat rooms. The pressure
to own stocks so you can converse about them is high. But are you happy
with them? Is anybody happy with them? How many of your colleagues
have stopped to ask what their emotional needs are in their investment
relationships? Do they act like they know what their emotional needs are?
Let’s return to the question that started this chapter and look at the
emotional dilemma apart from the financial. What emotions are triggered by
having to choose between retirement savings and vacations? Do you find
yourself feeling guilty when you go to Hawaii instead of putting the money in
an IRA? Or do you get depressed when you cannot go to Hawaii because
all your extra savings are tied up in IRAs and other retirement plans?
Investment compatibility becomes a possibility when you first admit
that investing triggers difficult emotions. Try this series of questions and see
if you relate to any part of the emotional dilemma:
* Have you ever found yourself losing sleep over the market,
angry with your broker, unsatisfied with your returns, yet
unable to pull out of the market?
* Are you jealous of your business associate who has turned
it all over to a money manager and has no idea how he is
doing?
* Does the woman across the street with her string of singlefamily
houses irritate you?
How did you react when that 35-year-old coworker retired?
* Do you value honesty yet find you have lied to several
people about your investments and investment returns?
* Do you seek serenity over financial security?
* Will high returns bring you serenity or just increase your
craving for more high returns?
The more you look at it, the more emotionally charged investing becomes.
Financial advisors discuss risk as risk of losing money. Isn’t the real
risk emotional? If you are not in the stock market, you risk being an outcast
at the beach gatherings this summer. But if you are in the market, you risk
losing sleep and losing time trying to keep up with how you are doing, how
the market is doing, and how well everyone else is doing compared to how
you are doing.
If you knew yourself better and knew more about the emotional aspects
of different investments, investing would be more satisfying. Try this
question. Is it easiest for you to trust people, financial markets, or the U.S.
Treasury?
Those who have a hard time trusting people will find that turning their
assets over to a money manager or a stockbroker creates fear. Many independent
business people founded and built up their own businesses because
they only really trust themselves. That is fine. If you are like that, yet you
have turned your money over to a money manager, you will be uncomfortable
even if the money manager produces outstanding financial results. You
will be happier making all your own investment decisions even if it costs you
money.
Some people cannot trust financial markets. Perhaps you saw your
parents lose a fortune in stocks. In that case, you may be more comfortable
receiving interest payments from Treasury bonds, even if you could make
more money in stocks.
Read More : Investing triggers many emotions
