An important connection links money with emotions. The fear of insufficient funds or the devaluation of one’s portfolio inevitably leads to negative emotions. On the other hand, gaining an important sum, for example a lottery win, can cause a reaction that compares with pure bliss.

Experts in the investment arena have been studying the behaviour of investors for several years, as they pass from euphoria to panic depending on market developments. This study has even led to a new discipline known as “behavioural finance”.

The fact is, no matter the trend, the markets have the knack of putting an investor’s nerves to the test. The stock markets are on the rise? Some investors wonder if their investments will allow them to benefit from the surge. The stock markets tumble? They wish they had a more secure portfolio. The interest rates go up? They simply don’t know what to do.

Evidently, as an investor, one fears inflation, unemployment and recession. Sometimes, we go so far as to think that the financial analysis and information transmitted by the media only add to our anxiety.

The Quest for Returns: An Important Stress Factor

One common belief is that investment is an art that rests on the search for an impossible balance between the risk we are ready to tolerate and the optimal return allowing us to attain our financial objectives. However, the particularity of this art is that the point of equilibrium differs for each investor.

The Quest for Returns = Exposure to Risk!

Here again, emotions run high since investors constantly wonder if their returns will be sufficient, and if their risk level is adequate. Plagued with these questions, their stress levels soar.

How to invest without losing sleep?

Here are a few tips to help you manage your emotions as an investor:

• Establish your investor profile and invest accordingly.
  Consult your advisor or financial planner in order to establish your investor profile. Your priorities, needs, age, and tolerance to financial market fluctuations will allow to establish the parameters needed to define your investment portfolio.
  


• Keep your eyes on the horizon.
  Sailors say that this is a good way to avoid getting seasick! Your investment horizon is one of the elements serving to determine your investor profile. You plan to start to cash in your investments in 5, 10 or 15 years? If such is the case, the long-term performance of your portfolio is what is important, not the daily, monthly or quarterly returns. Thus, you can forget the evening news that covers the fluctuations of the day.
  


• Invest on a regular basis.
  Nothing is more stressful than trying to outguess the trends of the financial markets, even more so since they become clear only once they are well and truly established. By investing regularly, you can forget this concern since the risk is spread over time. In fact, by including periodic investments in your budget, you can get richer without even thinking about it!
  


• The market is down? Stay invested!
  Excessive emotions often wreak havoc when the markets suffer a downturn. Investors are then tempted to pull out of the markets. They want to liquidate their devaluated investments and focus their portfolio on investments that are deemed more secure. This is a mistake. The best way to rapidly recover the value of one’s investments after a downturn in the markets is to stay invested and to continue to invest on a regular basis.
  

One last tip: Don’t keep all this stress to yourself. Talk about it to your advisor or financial planner.