Psychology of Investing

The psychology of investing explores how emotions, biases, and mental habits influence financial decisions. It recognizes that investors often react irrationally—like panic-selling during a decline or holding onto losing investments due to hope—leading to inconsistent or poor outcomes. Understanding these behavioral tendencies helps investors manage emotions, avoid common pitfalls, and make more rational choices. Overall, it emphasizes that successful investing isn’t just about knowledge or strategy, but also about self-awareness and emotional discipline.