Weekend Reading: Is It Really Better to Control Our Emotions?

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

When it comes to investing, you might have heard it’s best to separate your emotions from your financial decisions; however, doing so causes you to eliminate your life’s worth of wisdom.

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Factoring feelings into finances: Recent research shows that instead of being a reaction to what is happening, your emotions are continually predicting what will play out next. They simultaneously adjust your response based on whether or not your predictions are accurate, and remain on autopilot as events unfold. This isn’t to say your emotions should completely overtake your investment decisions, but they can be dealt with more proactively at a higher level, simply by:

📌 Asking yourself, “What am I feeling and why am I feeling it?”: Sometimes, you need to “feel the feeling” instead of rationalize it, then sort it out and identify where the reaction is stemming from.

📌 Getting granular on defining the emotion you are feeling: The more specific you are on identifying how you feel, the more effective you will be with handling that emotion. This is especially helpful when it comes to negative emotions, which when ignored, bubble to the service and can affect your decision-making mindset.

📌 Learning to distinguish between intuition and impulse: When you can sense what will happen next, but aren’t able to pinpoint exactly why, that’s intuition. However, impulse is more of a knee-jerk reaction to an event and can cause you to dismiss any careful consideration. This is necessary in an emergency, but not often in your financial life.

Look inward: Your emotions are not a flaw to be ignored, but instead, a valuable asset to listen to and evaluate for context.