Avoid emotional investment decisions

What’s the biggest obstacle to your ability to invest successfully? Is it the ups and downs of the financial markets? Political events? The fact that you weren’t born rich? Actually, the chief hurdle you face is something over which you have control: your own emotions.

Your emotions can lead to a variety of ill-advised investment behaviors, such as these:

• Cutting losses – Declines in the financial markets can lead some investors to try to “cut their losses” by selling investments whose price has declined. Yet, when prices have dropped, it may actually be a good time to buy investments, not s...