Negative Mindset And How It Affects Your Investments

Just as the other twin of the placebo is nocebo, the other side of a negative investment mindset can set you on a wrong trajectory.

Your mindset represents your series of thoughts that are formed based on a number of factors. Who you are, your environment, your circle of influence, your level of education and so much more.

Just as you have heard countless times, you are a product of your dominant thoughts. When those thoughts are positive, spurring good actions and having the power to effect change, the results can be amazing.

Think of it like the placebo effect where your mind is above matter and you can control the outcomes of your life when you focus on them. However, just as the other twin of the placebo is nocebo, the other side of a negative investment mindset can set you on a wrong trajectory.

There are a number of negative mindset tools that can have your investments crashing down. They include:

Fear/ Anxiety

Fear is an emotion that holds you back. Humans are naturally pain-averse. As such, if a thing has caused us a level of pain before, like fire, we tend to stay completely away from such a thing.

Sometimes, it doesn’t need to have happened to us. Maybe a friend or a family member. Being afraid of something makes you stay away from it completely. Fear will not only prevent you from investing, but it will also push you to make irrational decisions as a result of it when you do invest.

Overconfidence

A direct opposite of fear is overconfidence. While it is amazing to be passionate and confident in your investments, too much of it can also set you on a wrong path.

It can cause you to react or make decisions from a place of little knowledge. Overconfidence can cause you to ignore reason and live in a level of denial. As such, it is not uncommon to see investors who were too sure of themselves and incurred loss a result of it.

Discouragement

It is definitely normal to feel a little sting when our investment plans don’t go as expected. It is how you react to this information that could spell the difference and not the action itself.

The problem with discouragement is that you lose hope – and investment thrives on hope. Without hope, you don’t anticipate anything and this can directly influence the actions you take around your investment.

It will only be a matter of time before you realize you’re investing solely for the sake of it and it isn’t yielding anything because you’ve stopped focusing on your investment goals. It is important to keep the fire burning until the end.

Anger

Another really bad emotion is anger. Beyond investments, anger is one emotion that causes us to self-sabotage. We say things we don’t mean and react irrationally to a lot of the information that we receive at that moment.

In investment, anger might come as a result of losses or the operations of a business. Without taking the time to stop to correctly rationalize the situation, you might make decisions that will be disastrous to your investment portfolio.

It is important to be conscious of these emotions and have them in order. They cause more harm than good.

Written by Lawretta Egba.