Emotion and Investment (2024)

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What is 'investment'? |The effects of investment | So what

Investment is an important principle in emotion, especially if you want to change minds and get people to act in desired ways.

What is 'investment'?

Emotional 'investment' in a subject is the degree to which emotions are evoked when the subject is encountered.

Things in which we can invest include:

  • Relationships with others.
  • Ideas and ideologies.
  • Membership of groups.
  • Pleasures such as listening to music and hobbies.
  • Development of our selves and our careers.

Examples of emotional investment include:

  • A couple who love one another and who are committed to their partnership.
  • A football supporter who is passionate about the local team.
  • A member of a religion who regularly prays and attends church.
  • A stamp collector who studies the history of stamps.
  • The drive for personal success that leads to study and qualification.

In relationships, investment is often a reciprocal arrangement, where there is a joint decision to invest in one another.

The effects of investment

Investment leads to deep commitment and there may well be a spiral of actions and further investment that serves to progressively deepen investment.

Typical effects of emotional investment include:

  • Increase in loyalty (to other people, social groups, brands, employers, etc.)
  • Spending time and money on the subject.
  • Seeking to persuade others to also become invested.

Examples of these effects of investment include:

  • A loving couple who would not consider other romantic attachments.
  • A football supporter who attends every game, even distant away fixtures.
  • A member of a religion trying to convert 'non-believers'.

Once a person is invested, then they will not only act in ways supportive of the investment, they will also seek to justify the investment to themselves, typically by becoming more invested and possibly seeking to get others invested also.

Investment leads to higher levels of emotion, including delight, frustration and anger. In contrast, lower investment leads to neutral emotions. For example, consider a scenario where a local football team beats a national football team. The local team supporters would be delighted, and the national team supporters disgusted. Others, who are less invested in their teams would merely be surprised.

In relationships a certain degree of investment is expected by each party. If the actual investment is below the desired investment, then this will cause tension. There may also be an upper limit on expected investment and when one person over-invests relative to the expectation of the other person, then this also can cause problems.

If you want a person to take something seriously, work to get them emotionally invested in the subject. There are two key stages to this: (a) Getting sufficient initial investment to get them committed, and (b) Sustaining the investment to keep them operationally active.

Gaining initial investment

Was to get people emotionally invested include:

  • Being passionate yourself, raising the emotional temperature and showing the way.
  • Connect the area of investment to the person'sneeds and goals.
  • Offering proof that socially desirable other people are already invested.
  • Asking them to take small and easysteps.
  • Get them to give something they value.

Sustaining investment

Ways to sustain investment include:

  • Getting them to act in aligned ways (so they have to justify their actions to themselves).
  • Get them actively involved in ways that show to others their investment.
  • Creatingevidence that their investment is paying dividends.
  • Making itdifficult to divest or otherwise awkward to return to the previous low-investment state.

See also

Change Techniques, Investment principle,Investment Model

Emotion and Investment (2024)

FAQs

How do emotions affect investing? ›

Investing based on emotion (greed or fear) is the main reason why so many people are buying at market tops and selling at market bottoms. Underestimating risks associated with investments is one reason why investors sometimes make suboptimal decisions based on emotion.

What does emotional investment mean? ›

Emotional investment happens when you focus emotional energy on something you find fulfilling and hope for happiness in return. Become emotionally invested in a relationship by sharing your feelings openly and showing curiosity about your partner's ideas and interests.

How to undo emotional investment? ›

Regardless of your goals, timeline or risk tolerance, the following strategies can help you avoid emotional investing and make smarter investment decisions.
  1. Think Long Term. ...
  2. Diversify Your Investments. ...
  3. Use Dollar-Cost Averaging. ...
  4. Consider Costs. ...
  5. Get Professional Advice.
May 3, 2023

How do you take the emotion out of investing? ›

Avoid the Emotional Investing Trap
  • Overcoming common behavioral biases.
  • Be aware of common behavioral biases.
  • Defining your goals and time horizon can help you avoid emotional biases.
  • A bucketing approach is one way to address different time horizons.
  • Digital advice is designed to add discipline and overcome emotion.

What is an example of emotional investing? ›

Emotional investors may also follow the crowd and make investment decisions based on what others are doing. For example, if everyone is buying a particular stock, an emotional investor may feel compelled to buy it too, even if it doesn't align with their long-term investment plan.

How do I stop being emotionally invested? ›

Here are some ways that can help you know how to break emotional attachment to someone:
  1. Categorize how you feel about your partner. ...
  2. A clean, swift breakup. ...
  3. Give yourself some space. ...
  4. Planned date nights and scheduled calls. ...
  5. Find a hobby or a side hustle you like. ...
  6. Disable notifications if you're getting distracted.
Nov 23, 2023

How to invest without emotion? ›

Consider automating some of your investment moves in advance and always keep your long-term goals top of mind. Fight the urge to take actions driven by emotions such as fear or greed. Hiring a financial advisor can also help you stay on track and provide you with well-reasoned advice if and when you become emotional.

How can you tell if someone is emotionally invested? ›

7 signs a man is emotionally invested in you, according to...
  1. 1) He regularly shows you physical affection. ...
  2. 2) He shows genuine interest in your interests. ...
  3. 3) He expresses his emotions openly with you. ...
  4. 4) He's got your back, no matter what. ...
  5. 5) He's consistent with his communication. ...
  6. 6) He makes future plans with you.
Jun 4, 2024

How do we become emotionally invested? ›

Often, emotional investment is something that occurs naturally. As you build a relationship with another person, you become invested in the partnership; it's something you care about. If you become emotionally invested in an unhealthy way, it's likely due to the attachment you feel to an outcome of some kind.

Why do I get emotionally invested so quickly? ›

If you get attached easily, you may have an anxious attachment style. People with anxious attachment cling to others because they're afraid of being abandoned. You can get attached quickly if you have low self-esteem—you might jump into relationships because you crave validation from others.

Why am I so invested in others? ›

You could be afraid of loneliness that's why you get attached easily, thinking that if you love them and won't leave them they'll do the same. How to overcome this? Surround yourself with more people, engage in activities that make you more social (volunteering maybe)?

How do I stop letting my emotions rule me? ›

Let's look at 7 strategies that can help to manage emotions in a healthy and helpful way.
  1. Identify and reduce triggers. ...
  2. Tune into physical symptoms. ...
  3. Consider the story you are telling yourself. ...
  4. Engage in positive self-talk. ...
  5. Make a choice about how to respond. ...
  6. Look for positive emotions. ...
  7. Seek out a therapist.
Jun 22, 2021

What causes emotional investment? ›

Causes of emotion-based investing

The media is one of the major influences on market fluctuations. Good news causes people to buy stocks, the same way negative news causes people to sell their stocks. If a fragile investor follows the news and sees that the stock market is falling, it can lead them to panic sell.

How do you disinvest emotionally? ›

Here are some things you can try.
  1. Identify the reason. Ask yourself why you're now deciding to detach from the relationship. ...
  2. Release your emotions. ...
  3. Don't react, respond. ...
  4. Start small. ...
  5. Keep a journal. ...
  6. Meditate. ...
  7. Be patient with yourself. ...
  8. Look forward.
Aug 20, 2021

How to detach emotions from money? ›

Here are four tips on how to keep emotions and investing separate:
  1. Set Financial Goals. ...
  2. Stop Checking on Your Performance Every Day. ...
  3. Know the Risks in What You Buy. ...
  4. Create a Professional Buffer. ...
  5. Talk to a Financial Advisor.

How do emotions affect trading? ›

Biases or subjective prejudices, heuristics or unconscious mental patterns, and emotions such as fear and greed are strong drivers of traders' decision making and therefore trading performance. Behavioral finance aims to understand financial decision making and how this affects financial markets.

How do emotions influence what we buy? ›

Emotion Triggers Impulse Buying

People mostly buy things based on how it looks, feels and tastes. The thought of affordability, which is mostly rational, normally comes later after likeability based on emotion has already kicked in.

What are emotions how emotions affect on financial market? ›

Emotional Finance examines how emotions affect financial decisions. It shows that investors' decisions can be influenced by their emotions, such as fear, greed, optimism, or regret (Loewenstein et al., 2001).

Is the stock market driven by emotion? ›

The stock market is being driven not by fundamentals, but by investor emotion and the fear of missing out — and a recession could send the S&P 500 plunging by as much as 30%. That's according to Paul Dietrich, the chief investment strategist of B.

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