The Psychology of Investing: Why Smart People Make Dumb Decisions
Don't get me wrong, you can understand compound interest, diversification, and market fundamentals and still make terrible, (even horrible, I'd say) investment decisions. The reason is that investing isn't done by spreadsheets alone. Real people make decisions while experiencing fear, excitement, impatience, and uncertainty. However, you can too. Knowing what you should do and actually doing it are two very different things. Make sure you act upon the things that you know are right, not trends or emotional in-the-moment decisions. I'd Try to Remove Fear Losing $1,000 doesn't usually feel like the same experience as gaining $1,000. Investors tend to feel losses more intensely than equivalent gains, which can lead them to make decisions based on avoiding pain rather than pursuing their long-term goals. When investing, you must have an open mindset and just plainly accept that you will eventually lose money. For example, during a market decline, selling might seem li...
