Should you be emotionally invested in your financial future?

Being emotionally invested in your future is helpful — and maybe essential — when making decisions, plans, and investments that you hope will pay off long-term. The choice to invest when you’d rather splurge is easier if you’re emotionally invested in your future.

Being emotionally invested is not the same as emotional investing. As an example, emotional investing is making investment decisions based on your emotions which could be greed or fear.

Over 47% of investors say that it’s hard to keep their emotions out of investment decisions. But they also admit in the same survey that they believe their investments would perform better if emotions were left out of the equation.

What is emotional investing?

Emotional investing is choosing to buy or sell investments based on emotions rather than facts or a rational decision-making process. 

Classic examples of emotional investing are seeing the news about a stock going up and choosing to buy it right away, or selling stock when it starts to rapidly decline. In these events, your emotions may come into play when you say, “I can earn money!” and feel a surge of joy, or when you say, “I’m going to lose everything” in a way that feels bad. 

But those moments may not always be the best times to buy or sell your stocks. Here’s what you need to know about emotional investing.

Does emotional intelligence have an impact on investing?

Emotional intelligence is the ability to be aware of and control your emotions. This type of intelligence includes self-awareness, empathy, motivation, self-regulation, and social skills.  

Having a high level of emotional intelligence could make it easier for investors to objectively assess their options and select appropriate securities and investments for their current situation. 

Some investors jump into an individual stock or the larger market when prices are high and the future appears bright. However, regarding investments, Warren Buffet famously said, “It’s an easy game if you can control your emotions.” 

Overcome emotions with a solid investment plan

Studies from Magnify Money show that 66% of investors regret emotional investing. To avoid finding yourself in an emotional investing trap, use the systematic investing tips below to help plan for your financial future. 

Plan your investment strategy 

Planning your investment strategy and sticking with it are two ways to use your emotional intelligence in a way that makes you emotionally invested in your future. 

A MoneyLion Investment account can help you invest regularly and also choose a portfolio strategy that helps you invest in what you’re interested in, such as socially responsible and disruptive trends or income-focused options. 

You can start investing with as little as $5! You can choose a portfolio strategy and for a monthly account fee of $1, $3, or $5 depending on the value of the account, you can design your own portfolio or choose the auto-investing feature. 

Prioritize your goals

To set up a responsible financial future, it can help to prioritize your personal goals. 

• Are you thinking about investing for your retirement or a more short-term goal?
• Do you want to invest aggressively or conservatively? 
• Can you put some money into an investment account weekly or monthly? 

These questions and decisions should guide your investment strategy as you prioritize your goals. 

Don’t be emotionally blind

Just because you don’t want emotions to control your investing doesn’t mean you can’t use your intuition or values to guide investments. There are times when emotions are beneficial. For example, you might not want to invest in a company that goes against your moral or ethical compass. Thematic investing is a great way to invest with your preferences in mind. 

Protect your financial future

Being emotionally invested in your financial future means using your emotional intelligence to help plan a smart investment strategy. With a MoneyLion Investment account, setting up the systems to regularly invest is a way to approach investing in your financial future.