As the pandemic pushes markets up and down and up again, lots of investors are feeling unsettled about their portfolios.
A June MagnifyMoney poll asked more than 1,100 U.S. adults with investment accounts what their biggest anxieties were when it came to the markets. Almost a third, 30%, of those polled who had investments in stocks reported that they have been so worried that they cried.
Of those anxious enough to shed tears, 43% said it was because they lost money. Over a third, 36%, said they were overwhelmed, and 34% felt bad about selling assets too early.
"Money stirs up all kinds of emotions, and just as those emotions can trigger impulse spending, they can also trigger impulse investing," says Bankrate chief analyst Greg McBride. "Bailing out during temporary market downturns or hopping on the bandwagon of a 'hot tip' are the type of impulse decisions that can be later filled with regret and have lasting damage on your finances."
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Two-thirds of the investors in the study said they regretted making a portfolio move based on emotion, and 32% admitted to trading while drunk. Gen X and millennial investors were more likely than their older counterparts to act on impulse.
"Now more than ever, technology has made impulsive buying decisions easier," says Ryan J. Marshall, a certified financial planner at ELA Financial in New Jersey. "You can pull a device out of your pocket and spend tens of thousands of dollars in a very short time frame without spending much time thinking about the decision."
Those same devices make it easy to sell investments, too, especially if you're worried about volatility or feel like you need the money. But panic-selling during a downturn means you lock in your losses. Focus on building up your rainy-day fund so you have some cash on hand for a crisis, experts suggest.
"An emergency fund set aside in an online savings account allows you the quick access you need for unplanned expenses and is the buffer, so you don't have to be a forced seller of stocks in a down market," McBride says. "Money in the stock market should be money you're willing to invest for a decade or longer."
Overall, nearly 40% of the investors polled said they've lost sleep worrying about stocks. If this has happened to you, experts suggest taking a step back. Consider muting the news if it causes too much anxiety. Remember that you don't have to monitor, let alone take part in, every new stock trend.
Consumers who directly manage their funds day-in and day-out can have a harder time keeping emotions out of investing, according to the MagnifyMoney survey. About 7 in 10 of those managing their own funds said they had made an investing choice they later regretted. Meanwhile, 59% who took more a hands-off approach said the same.
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"To help investors with watching their portfolio, they should tie a goal to their investment," Marshall suggests. "If it's a longer-term goal, they should keep a long term perspective and maybe check once a month. Remember, money tied to shorter-term goals should be more conservative in nature compared to longer-term goals."
Get outside help if you need it, adds McBride: "A financial professional can be the calming voice that refocuses you on your long-term goals when short-term volatility reappears."
You don't need to monitor the markets daily as long as you take a long-term approach. Advisors often recommend making regular contributions to low-cost, broad-market index funds and ETFs, which can diversify your assets and alleviate the stress of trying to choose stocks yourself.
Include a mix of stocks, bonds, and other assets in your portfolio, says McBride, so if some areas of the market perform poorly, you'll still be invested in others that are standing strong. "The concept of diversification is to reduce the risk of your portfolio so you see less severe downturns, can sleep better at night, and are less prone to impulse-driven sell decisions."
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