One of the many emotional battles investors fight is a form of buyer’s remorse when it comes to rationalizing their investment decisions.  Often, when analyzing their portfolios, and only when looking in a rearview mirror, many investors will engage in a process of self-recrimination.

There, lying among all your mediocre investments, is that one gem which produced outstanding returns, shining like a diamond amid a bucket filled with coal.  It is a natural tendency to want to chide yourself for not investing more since, of course, you had an intuition that it was going to be the one to propel you into an early retirement with a luxury yacht to boot.  Yet you hesitated to put too much money into it for fear that it might not work out.  Now, with the clear vision of hindsight, you berate yourself for your timidity.

Similarly, when an investment doesn’t pan out as expected, and worse if it lost money, you might experience the opposite feelings. You say things like, “I knew better than to put so much money into that lousy investment.  I should never have listened to my golfing buddy/neighbor/financial advisor because I knew it was a bad idea from the get-go.” 

These “never enough or always too much” thoughts have several things in common.  They are negative, unnecessary and irrational. Since you or no one else knows for certain if an investment will work out as expected, it is dangerous to engage in this sort of thinking and can drive you to a state of mental imbalance if practiced long enough.  If anyone mentions that they have a sure thing, it might be a good idea to walk away.  Similarly, if you ask someone (especially your financial advisor) what will be next year’s best performing investment(s) you are asking for trouble.  The last time I checked, all crystal balls (especially those belonging to the analysts and market strategists on Wall Street) were equally ineffective. 

Among other things, successful investing requires financial discipline and emotional detachment. Unfortunately, some investors lack these basic attributes and that is one reason they are unable to reach their financial goals.  By engaging in the negative thought-speak described above and constantly moving from one idea to the next, they never gain a foothold on permanent wealth creation.  This requisite mental fortitude combined with proper planning and a low-cost, tax-efficient and risk-appropriate investment strategy is critical in achieving meaningful progress.  Successful investors plan, execute, monitor and tweak as needed, but then they rest and turn their focus to those things that are more important like their family, faith, health and career.  Remember, successful investing is very simple, but it is never easy.