Are You Emotionally Attached to Your Investments

We all do investments in multiple places be it Mutual Funds, Stocks etc. And a lot of investors display strong emotions to the management company or the type of companies. For example, my father has a string emotion to some of the government undertaking company.

PC: Pixabay.com

Now the problem with this is that even though the company is not doing good, you will be attached to it as the emotion is attached. For example, one of my friend had YES Bank share, and the company when down from 400 to 10 but still he is holding it, why because it was his first investment.

When you are emotionally attached to a investment then you will not think rationally. Each and every move by management seems like a great move. But we are investors, if the company is not doing good we should take an exit. I know investors are like a business owner itself but you are not taking decisions. And one bad decision can ruin your future wealth journey.

For example, I had one ICICI value fund, which was not doing good from the last 3 years. The value fund usually don't do well year to year basis but it gives a very good returns in the bull run. But in my case, it was not giving. I had two options, continue investing as it was my first investments or stop and invest in other funds. So I thought rationally and came out of that fund instead of waiting. For me future returns matter than stiking to a particular fund.

Similarly people usually don't sell their old home because they are emotionally attached. But if you are not well to do, then selling the old house and using that money to improve your financial health is much better option than sticking to it. If you are not staying in thar, eventually it will become inhabitat and will not fetch you good money.

Posted Using INLEO