One Simple Way to Improve Your Investment Attitude

An investor's mindset and emotions play a crucial role in the performance of their portfolio. Successfully managing one's attitude and emotions is key in investing, just as it is in other aspects of life.

If an investor constantly anticipates market downturns and expects negative outcomes ("perma-bear"), their portfolio typically underperforms. Research indicates that missing even the top 10 best days in the market can significantly impact returns.

So, how can investors avoid falling into a negative mindset?

In essence, whenever you catch yourself saying "I have to," try reframing it to "I get to."

This simple shift may seem trivial initially, but its long-term effects can be profound. Here are practical examples where changing your mindset can yield significant benefits in your financial life:

- "I have to invest" versus "I get to invest": During market downturns, many investors feel anxious. Despite knowing they should stick to their plan, negative news can provoke panic. As an investor, you're fortunate to have the financial capacity to save and invest for your future. Market downturns also present opportunities to buy assets at discounted prices.

- "I have to stop impulse buying online" versus "I get to allocate my money consciously": Rather than feeling guilty about impulse purchases, consider redirecting that money towards things that truly matter to you. For instance, before making an impulse buy online, delay the purchase for 24 hours. This pause can help you decide if the item is genuinely necessary.

- "I have to improve my budgeting" versus "I get to prioritize my spending": Creating a budget allows you to direct your money purposefully. Rather than feeling constrained by a budget, view it as a tool to achieve financial goals. Include rewards within your budget to maintain motivation, such as setting aside discretionary funds for guilt-free spending.

- "I have to contribute to my 401(k)" versus "I get to lower my taxable income and save for the future": Contributing to a pre-tax 401(k) not only reduces your tax liability but also allows your investments to grow tax-deferred. If your employer matches contributions, you immediately benefit from higher returns.

- "I have to save for my child's college expenses" versus "I get to create opportunities for my children and enjoy tax advantages": Funding a 529 plan generally offers tax benefits (the specific benefits vary by State) and helps make college costs more manageable. Knowing you're securing your child's educational future can provide immense satisfaction and peace of mind.

By reframing your thoughts in these scenarios—from obligations to opportunities—you can cultivate a positive and proactive approach to managing your finances. This mindset shift not only improves your financial decisions but also enhances your overall well-being in the long run.

Need Help Managing Your Money Mindset?

Hi, I am Kirsty Peev, CFP®, AIF® and I am a Certified Financial PlannerTM (CFP®) professional at Halpern Financial in Ashburn, Virginia. I help keep my clients in touch with their investments and continually educate them on how their portfolio responds to market movements and various economic and market scenarios. I believe in sitting on the same side of the table as my clients, as this approach enables me to develop personalized, goal-based strategies.

Schedule a complimentary call with me by calling the office 240-268-1000 or scheduling a call through our website. I look forward to meeting you. 

Kirsty Peev

Director of Portfolio Management