Expert Bloggers

Taking Emotions Out of Investment Decisions

By Peter Richards, Wealth & Legacy Advisor, Peter Richards Advisory Group
www.peterrichards.ca

I THINK IT goes without saying that no one wants to be considered the weakest link. Who doesn’t want to be the star player? And it’s because of this mentality that often times we end up ignoring the weak link. This applies to all aspects of our lives—including our wealth.

There’s a weak link in wealth planning and wealth management that needs to be addressed—our emotions. More bad decisions are made because of emotional responses than almost anything else. Sometimes, it’s a natural thing to let our emotions dictate our responses. Whether it’s when we’re dealing with our kids or when we’re on the golf course—our emotions can get the better of us.

But letting your emotions mess up your putt is a little different than letting them affect your wealth. Clearly, your wealth is a whole different ball game—the consequences are far greater.

Financial decisions need to be primarily based on good analysis, clear direction and capital efficiency. Reactive emotional actions are incredibly risky and generally don’t deserve to be integrated into a plan.

This doesn’t mean that emotions should have no part in the planning process; they should be at the beginning of the process so that we can get a strong, clear understanding of what truly matters to you, your business and your family—those emotions matter.

But investors who make decisions based on emotions are less likely to realize their long-term financial goals than those who act in a more rational way. Of course, it is easier said than done to invest without emotion, which is one reason why having a trusted wealth adviser on board can be invaluable. Their objective approach can act as a counterbalance to your emotions, ensuring that you stick to your goals and achieve your financial objectives.


Peter Richards is a Wealth & Legacy Advisor at Peter Richards Advisory Group. Established in 2008, Peter Richards Advisory Group is dedicated to helping business families ensure their wealth remains intact. Clients describe Peter and his team as experts at integrating personal and corporate wealth, and identifying unknown problems. They ask thorough and tough questions in order to connect numbers to vision and values. The result is a significant positive impact on wealth. Peter can be reached at peter@peterrichards.ca.