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Break from the Grind August 24, 2021
Emotions and Investing Don’t Mix
Sixty-six percent of surveyed investors have made investment decisions based on emotions that they’ve later regretted, but fewer investors who use an adviser have done so than those who don’t use one.
Reported by Rebecca Moore
Two-thirds of investors surveyed by MagnifyMoney said they have made an impulsive or emotionally charged investing decision they later regretted.
This is more common for members of Generation Z (85% of those ages 18 to 24) and Millennials (73% of those ages 25 to 40) than Generation Xers (60% of those ages 41 to 55) and Baby Boomers (54% of those ages 56 to 75).
The study of 1,116 U.S. consumers with an investment account found 37% have lost sleep worrying about the stock market, and 30% have cried over investing. The top reasons for tears include losing money in the stock market (43%), feeling overwhelmed (36%) and selling too early (34%).
However, investors who manage their portfolios on their own are more likely to make and regret impulsive investing decisions than those who let a financial adviser manage their portfolios. Of those who make their own investments, 71% have made a regrettable decision, compared with 59% of those who use an adviser.
Those who take investment decisions into their own hands are also more likely to struggle to keep their emotions out of it than those who use a financial adviser. Most investors (58%) agree that their portfolios perform better when emotions are left out of investing, but half of the investors who manage their own accounts report struggling to do this, compared with 45% of investors with financial advisers.
A financial adviser might not always help with feeling upset about investing, though, as the same percentage of investors who use an adviser as those who don’t report crying over investments.