Strategic investing always takes you further than emotional investing. But if you’re nervous about investing, you’re not alone. After all, the markets move up and down, and volatility has had serious implications in the past.
Taking risks, which is inevitable when it comes to investing, can be scary. But fear is an emotion, and emotions are precisely what you don’t want to affect your investment decisions.
Ally Invest research finds that 61 percent of adults think investing in the stock market is “scary or intimidating.” Another Investopedia survey finds that less than half of affluent millennials feel confident about investing and retirement planning. Only 37 percent feel knowledgeable about it at all.
Here’s how to feel far less intimidated by investing and far more strategic in your decisions.
It’s easy to feel anxious when your assets take a hit. You may feel increasingly inclined to immediately pull your money out of your portfolio before matters get worse. But it’s important to remember that investing is a long-term game.
Consider your financial future. What is your investment timeline? The sooner you get started investing, the more time your money has to make more money—and the more time it has to navigate volatility and recover from market downswings.
What goes up must come down, and vice versa. The average annual return on investments is 10 percent, so just leaving your investments be can earn you more through compounded interest, alone, over time.
Like fear, greed is another emotion that can affect your long-term return on investment. It’s a primary reason why so many investors buy at market tops and sell at market bottoms. But buying and selling at such frequency takes immense skill and ample research with access to coveted performance-predicting tools.
After all, you’re probably late to the game. By the time a stock’s performance makes it to the general public, it’s likely that its value has already adjusted accordingly. Unfortunately, most retail investors are behind the curve. That’s why taking the emotional buy-or-sell, fight-or-flight response out of the equation can seriously help you.
One way to remove the emotion from investing is by investing in strategies, not stocks. When you stock pick, you spend a lot of time really getting to know a company and feeling emotionally, not just financially, invested in it. When you invest in strategies, however, you’re making moves based on the markets, not individual stocks.
It’s a lot easier to keep an even keel when you keep a diversified portfolio. Portfolio diversification refers to the practice of spreading your investments around in various types of assets or across industries to limit your exposure to any one asset or industry and reduce the volatility of your portfolio over time. Research shows that, on average, well-diversified portfolios generate more reliable returns than non-diversified portfolios over 25 years or more.
At the end of the day, finances are at the root of many people’s day-to-day stress. A growing body of research suggests that money management can take a serious toll on mental health. You’re only human, and detaching your emotions from your investments is easier said than done.
That’s why investing with AI is key. AI strategies help investors identify wiser market moves. This is because AI empowers you to make more educated and informed decisions rooted in logic. Logic that comes from deep learning algorithms that crunch the numbers for you.
Q.ai leverages the power of AI to democratize the world of investing. You can hand over the torch to let AI manage your money for you, but you never have to sacrifice control. Because that can be scary, too.
Q.ai is the trade name of Quantalytics Holdings, LLC. Q.ai, LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of Q.ai's investment advisory services.