Information vs. instinct. When it comes to investing, many people believe they have a “knack” for choosing good investments. But what exactly is that “knack” based on? The fact is, the choices we make with our assets can be strongly influenced by factors—many of them emotional—that we may not even be aware of.

Investing involves risks. Investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

Deal du jour. You’ve heard the whispers—the “next greatest thing” is out there, and you can get on board, but only if you hurry. Sound familiar? The prospect of being on the ground floor of the next big thing can be thrilling.

But while there really are great new opportunities out there once in a while, those “hot new investments” can often go south quickly. Jumping on board without all the information can be a mistake. A disciplined investor may turn away from spur-of-the-moment trends and instead seek solid, proven investments with consistent returns.

Risky business. Many people claim not to be risk-takers, but that isn’t always the case. Most disciplined investors aren’t reluctant to take risks—but they do attempt to manage losses.

By keeping your final goals in mind as you weigh both potential gains and potential losses, you may be better able to assess what risks you are prepared to take.

You can’t always know what’s coming. Some investors attempt to predict the future based on the past. As we all know, just because a stock rose yesterday doesn’t mean it will rise again today.

In fact, past performance does not guarantee future results.

The gut-driven investor. Some investors tend to pull out of investments the moment they lose money, then reinvest once they feel “driven” to do so.

While they may do some research, they are ultimately acting on impulse. This method of investing may result in losses.

Eliminating emotion. Many investors “stir up” their investments when major life events occur, including births, marriages, or deaths.

They may develop renewed interest in their holdings or begin to second-guess the effectiveness of their long-term strategies. A financial professional can help you stay focused on long-term objectives and reduce the influence of short-term emotional decisions.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice and may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for information specific to your individual situation.

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer or state- or SEC-registered investment advisory firm.

The opinions expressed and material provided are for general information only and should not be considered a solicitation for the purchase or sale of any security.

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