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5 mental hacks for investing

What we'll cover

  • Common investing mental blocks

  • Mental hacks to keep you motivated

  • How to stay focused on your goals

When it comes to jumping into the stock market, sometimes the biggest obstacles are the hurdles inside your mind. Investing is largely mental, after all. Markets are constantly changing, and your ability to process and adapt to change can make or break your portfolio. Yes, even if you pick stocks like a pro.


Don’t get intimidated, though. It’s you versus your brain’s natural tendencies, but you can work to overcome them with a little bit of effort and intention. Try these five mental hacks to help tame your emotions and potentially strengthen your portfolio (and your mojo) for what comes next.

Deflect hyperbolic discounting

If you’re new to investing and feel overwhelmed, you’re not alone. It can feel like there’s so much information and so little time. In these moments, you might be tempted to forgo long-term payoffs for short-term rewards — that’s known as a bias called hyperbolic discounting.


Solution: Break your big decisions into smaller ones and tackle those small goals one at a time. That could mean investing a little at a time or starting to explore that stock you’ve always wondered about. And start early (it’s a smart move in life and investing). By keeping future, you and your retirement in mind, you’ll actively work to beat hyperbolic discounting and its analysis paralysis. 

Don't let risk compensation send you into a panic

The stock market is an ever-changing landscape. Stocks that have been unusually quiet (with some bumps here and there) may suddenly lead to higher volumes and more swings. As an investor, it can be tempting to jump at each and every change. That’s your brain’s risk compensation kicking into gear. It’s a completely normal reaction to lean into risk aversion, but remember that you’re running a marathon, not a 100-yard dash.


Solution: When stocks slide, remember your long-term goals. Is your plan to stay in the market for 10 or 20 years? If so, it may be wise to take deep breaths and stay on your course. Why? Because markets go up and down. It’s the natural rhythm of investing. Your brain’s risk compensation may tell you to run, but your best bet may be to act in line with your goals and plan. 

Check your ego to overcome Dunning-Kruger

Nothing can tank a portfolio quite like an overinflated sense of self. Our own hubris is a dangerous mindset that often leads to excessive risk-taking and unnecessary trading (also called the Dunning-Kruger effect). Market history is littered with investors whose portfolios blew up from risky, leveraged bets. With an uncertain economic outlook (and no crystal ball), it’s tough to know which markets or sectors will do well going forward.


Solution: Do your portfolio a solid and consider rebalancing by taking some money out of one asset class and putting it into another. It’ll help you lock in your gains and keep your risk in check. Don’t rely too much on market timing and avoid trying to guess what tomorrow holds.


Markets can change quickly, and things that work today may not work tomorrow. Different sectors and markets can top the chart as time goes on, depending on economic conditions, political events, regulatory changes and unforeseen events.

As an investor, it can be tempting to jump at each and every change. Resist.

Be wary of jumping on the bandwagon effect

Raise your hand if you’ve traded a meme stock! You’re likely in good company. About one out of every four of our customers were buying and selling meme stocks at the height of the GameStop short squeeze.


Social-based investing has been all the rage, and chances are it’s not going anywhere any time soon. Investing with the crowd could potentially have benefits, but it can be a tough game to play because it inherently ignores one of the wisest investing practices: goal-setting. Everybody has an investing goal in mind — even if they don’t want to admit it — and that goal is the starting point for all of your investing decisions.


Solution: Find your purpose by starting with honesty. Determine your why. You’re investing to make money, but what you’re using those funds for is what matters. It can be helpful to dig deeper and get more specific. Maybe that money you’re making will go towards a down payment on a home or saving for your kids’ education. Whatever the mission is, having a time or price target for your investments can help you decide when it’s time to buy or sell a position. Let the numbers guide you, not your emotions.

Keep your head out of the sand (and the ostrich effect)

Bad news happens. And when it does, it’s easy to shove your head in the sand and ignore the world (aka the ostrich effect). As an investor, it’s important to stay abreast of what’s going on but not to dwell too much on one story or piece of data. It’s a delicate balance.


Solution: Stay educated and know how changes impact the stock market. A growing economy tends to favor more conservative assets like stocks, especially when the Federal Reserve is keeping its policies extra supportive.


Learn to digest each headline based on what it could do to your own portfolio and goals, not somebody else’s. If you’re a long-term investor looking several years into the future, 99% of headlines probably won’t impact you’re the pursuit of your investment goals. Some of them are just little speed bumps on your journey.

A clear head and an eye on the future

In today’s world, there’s no shortage of distractions, and the stock market is no exception. Making matters even more challenging, our own brains often work against us, making it difficult to see the big picture. Keep calm, stay your course and remember that in the stock market (as in life) tomorrow is always a new day.

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