By John Kennedy, CFP® / June 1st, 2020
Fight or Flight
We all possess a fight or flight response to stress. Its origins are primal; the lives of our ancestors often depended on their ability to react logically in duress.
Stressful situations often inhibit our ability to think clearly, causing us to act out of fear rather than employing logic. Have you ever noticed how the pain of losing money often feels more significant than the success of growing money? Fear often causes us to work harder to avoid loss than to pursue gains.
The stress response to fear can cause you to make unnecessary, sometimes even detrimental, decisions about your money, and those decisions can easily impact the next 10, 30, or 50 years of your life.
So how do you manage your emotional response to volatility in order to make smart financial decisions? By establishing good investment habits now.
Smart investing means creating a custom plan designed to meet your personal financial goals, one that will continue to work for you even in stressful circumstances.