Emotions are created when the brain interprets what is going on around us through our memories, thoughts and beliefs. This triggers how we feel and behave. All our decisions are influenced by this process in some way. For example, if you are feeling happy you might decide to take a bike ride on a sunny day. But if you fell off your bike and had a serious head injury recently, riding the bike may instill fear and you could decide to walk instead. Sadness can fuel self-doubt and may cause you to think negatively towards change or taking risks. Anger can lead to impatience and rash decision making. Excitement can also encourage you to make sudden decisions but with a sense of hopefulness attached. If you feel afraid on the other hand, this can lead you down a path of uncertainty and indecisiveness. 

The thing is we all experience emotions, but can we set them aside in order to make rational decisions? We may be able to do this occasionally, but psychologists believe that we as humans are hardwired to feel them. It may be more productive to be aware of what is triggering these emotions and channel them to guide our decisions.

When investing, the level of risk we are willing to take is usually considered before we dive in. We think that the greatest risk we face is the volatility of the instruments we are investing in when in fact the greatest risk may be ourselves.  

Emotions are going to be experienced when the money we have worked hard to build is about to be invested. We must remember that these emotions are triggered by underlying thoughts, memories or beliefs that are not necessarily facts. While we may pride ourselves on thinking we are very rational beings, history shows that we do get overwhelmed by information and a slick sales pitch or catchy marketing does impact our decision making. 

Good or bad past experiences, the belief that investing is a fancy way of gambling or that the only way to make my money work for me is to invest or that investing over the long term is much more profitable than a savings account, or that investments always lose money – these beliefs will all trigger different emotions that will affect our investment decisions.  There are several ways these emotions can manifest: 

These emotions are driven by two fundamental factors: fear of losing money and the faith that money will be made. 

In our experience, guess who makes more money? Those that trust that money will be made in order to fund their dreams. 

Identifying which emotions are attached to fear and faith is important. 

Fear – Worry, sadness, anger, contempt 

Faith – Excitement, joy

Knowing and believing that you will reach your ultimate goal allows you to be eager when approaching investments. 

Fearful emotions can lead to panic and poor decision making, but what about intuition? How can we decipher between fear and that gut feeling? Intuition is not loaded with negative feelings or uncertainty, it’s an inspired feeling that comes with conviction and yes you should follow your gut but be mindful that strong emotions can drown out that gut feeling.

So how can you power through these emotions to make better investment decisions?

Let a trusted advisor help navigate you through emotions. As I cast my mind back to when the world was suffering the financial crisis of 2008, the bulk of my job was to help our clients weather the storm. The clients that didn’t react out of panic were eventually better off for it.  Some reports show that investors who had assistance during 2009 and 2010 following that financial crisis outperformed other investors by 2.92%.

The best advisors don’t just rely on data and statistics but by helping to remind us of the plan, keep a check on those emotions when things go wrong or if something might be too good to be true.

There is always going to be some hype around the stock market; the media in particular will treat every dip as alarming and every rally as unprecedented. These cycles are very normal and being patient and making consistent investment choices lead to gains in the long term. Weathering tremors and not getting too frisky when there is substantial growth is part of being a successful investor. 

So, how do you face your fear of investing?  Don’t obsess over the background noise and instead remain focused on the WHY you are investing. Set those long-term goals clearly.  Be intentional with all your investment decisions: I WILL BUY THAT HOUSE; I WILL RETIRE COMFORTABLY. 

You should feel inspired and excited when you invest. I learnt a very long time now to focus on my goal. I think of the satisfaction I will feel when this has been achieved, and block out any worry of the ups and downs in between.

I remember when I was having my son, I wanted to take unpaid leave from work so I could be at home with him longer.  I held the belief that if I stayed home longer, we could bond more, and he would be happier (the jury might still be out there). My concern was funding this time off work and building a comfortable nest for him. I remember my mother saying, “when children come, blessings come, the money will come” and so it did.

Now that I look back it was not all automatic, I was laser focused and I made the best money decisions out of the belief that things will flow and “blessings will come”. I was driven by wanting to be a good mum and the love I felt for him. Failure was not an option.  In the early part of the pregnancy, I worked hard to secure my promotion which was due, saved every penny and I chose lucrative investments to gain additional income. 

Fast forward years later and I want to make sure that I give him the best opportunities, I want him to have a place he can always call home and I allow this to drive my financial decisions.