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Keeping Short-Term Emotions out of Long-Term Investing

Keeping Short-Term Emotions out of Long-Term Investing

March 29, 2023

The process of investing can be difficult, especially when dealing with long-term investments and short-term emotions. Even though emotions can affect your decisions in the short term, it's important to keep them in check when making long-term investment decisions. Short-term emotions can hamper judgment, causing impulsive decisions that could harm your investing account. In this post, we will cover our top suggestions for avoiding short-term emotions when making long-term investments.

1) Separate short-term, mid-term, and long-term objectives:

Short-term goals refer to financial goals that someone wants to accomplish in a few years or less, such as saving for a trip or a down payment on a home. For short-term goals, it is usually best to invest in low-risk options, like high-yield savings accounts, money market funds, or short-term bond funds, to protect the money in the account.

Mid-term goals are financial goals that are three to ten years out, including investing for a child's college education or purchasing a car. For mid-term goals, it is usually best to invest in a balanced portfolio of stocks and bonds that can offer some growth potential and also protect against market volatility.

Financial objectives that are more than 10 years away, such as saving for retirement or accumulating money for future generations, are referred to as long-term goals. When investing for long-term goals, it is generally advised to invest in a diversified portfolio of stocks, bonds, and other asset classes like real estate or commodities with an emphasis on capital growth.

2) Establish a clear investment strategy:

When it comes to keeping short-term emotions in check, having a clear investment strategy in place is essential. Your risk tolerance, investment objectives, and investing time horizon should all be considered in your investment approach.

3) Diversify your holdings:

Having a diversified portfolio is another important way to stay away from short-term emotions when making long-term investments. By spreading your risk over several investments, you can reduce the impact of any one investment on your portfolio as a whole. This can help you keep your mind on your long-term goals and prevent you from making rash decisions based on short-term market changes.

4) Keep up with market news, but don't become fixated on it:

While investing, it's important to stay current on market news and events but to refrain from becoming fixated on each and every market blip. This may result in rash actions that harm your investing portfolio. Instead, concentrate on the market's long-term patterns and developments and change your investment approach as necessary.

5) Consult a financial advisor:

Working with a financial advisor can help you avoid adopting a short-term perspective. Your short-, mid-, and long-term goals can be defined by a professional advisor, who can also assist you in building a diverse portfolio and maintaining discipline in your investing strategy. A financial advisor can also offer crucial advice and assistance during times of market turbulence and economic instability.


If you want to build a successful investment portfolio, you should avoid letting short-term emotions affect long-term investments. You can make sure your investments are set up to handle short-term volatility and do well in the long run by having a clear investment strategy, setting goals for different time periods, diversifying your portfolio, and keeping up with market news but not becoming obsessed with it. Our team has decades of experience in preparing our clients and their portfolios for short-term volatility as well as providing knowledge to guide and educate our clients through market turbulence. Please reach out to us if we can be of assistance to you in any way.