The Psychology of Investing

The psychology of investing refers to how our emotions, biases, and mental habits influence our financial decisions. Factors such as fear, greed, overconfidence, or herd mentality can lead investors to buy or sell assets irrationally, often resulting in poor outcomes. Understanding these psychological tendencies helps investors recognize common pitfalls, like panic selling during downturns or overconfidence during booms. By being aware of these biases, investors can make more rational choices, maintain discipline, and develop strategies that align with long-term financial goals, ultimately improving their chances of investment success.