The past few years have been a lot—economically, emotionally, globally. If you've found yourself avoiding your portfolio, doom-scrolling headlines, or swinging between wanting to sell everything and ignoring it all… you're not alone. It’s a very human reaction—and one that can lead to emotional investing.
What is Emotional Investing?
Emotional investing happens when your financial decisions are driven by emotions—like fear, anxiety, or frustration—rather than logic or a long-term plan. It often leads to reactive behavior like selling during a downturn or chasing risky trends.
One possible trigger? What psychologists sometimes call crisis fatigue—that sense of burnout when stress feels unrelenting. And while emotions are valid, they’re not always reliable decision-makers—especially when it comes to your financial future.
Can Crisis Fatigue Lead to Emotional Investing?
Crisis fatigue isn't just feeling tired; it's a cumulative response to stress. And for investors, that kind of mental overload can be a major trigger for emotional decision-making. When we're hit with one big event (a recession, a market dip, or inflation), we gear up and power through. But when those stressors keep coming, our internal resources get drained. We lose perspective. We stop sleeping well. Our concentration dips. We might even feel anxious or hopeless.
Sound familiar?
We all have a limit to how much stress we can absorb before it starts to take a toll. When you're in a constant state of reacting or bracing for impact, your ability to think clearly, prioritize effectively, and make healthy decisions starts to erode.
The same thing can happen to investors caught in endless news cycles and economic whiplash.
Why is Emotional Investing Risky?
When we're overwhelmed, we naturally want relief. That might look like pulling out of the market to "stop the bleeding" or chasing riskier assets to recover losses quickly. But emotional investing often causes more harm than good, because:
- It’s based on the moment—not your long-term goals
- It increases the risk of buying high and selling low
- It can cause you to miss rebounds or compounding opportunities
In short, feelings are important to acknowledge, but they're not a strategy.
If you've been caught in the cycle of emotional decision-making, it may be time to revisit your approach and build in tools from behavioral finance that can help you respond instead of react.
What are the Best Strategies to Avoid Emotional Investing?
You don't have to white-knuckle your way through financial stress. Here are a few ways to stay clear-headed when the headlines are overwhelming:
Create Boundaries Around News Consumption
It's important to stay informed, but constant checking adds to anxiety. Designate one or two times a day to check the news or your portfolio. The rest of the time? Give yourself permission to disconnect.
Lean on Your Financial Plan
A solid financial plan accounts for market volatility. If you have a plan in place, trust that it's built to weather storms. If you don't, this might be the right time to create one with a professional.
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Stick to Healthy Routines
Simple things—such as sleep, nutrition, and exercise—have a significant impact on how you manage stress. Take a walk. Prioritize regular meals. Try to log off at night. These aren't just wellness tips—they're tools that support better financial decision-making.
Name Your Emotions
It's okay to feel frustrated, anxious, or even angry. Putting a name to your emotions can help you pause before acting on them. A journal, a trusted friend, or your financial advisor can all be helpful outlets.
Revisit Your Goals—Not the Headlines
Instead of focusing on short-term noise, bring the conversation back to what you're working toward: retirement, your kids' education, a home, more flexibility. That's your compass, not the S&P 500's daily performance.
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You're Not Alone: Getting Support During Financial Uncertainty
Emotional investing is common—especially during times of uncertainty. If you’ve been feeling stuck, overwhelmed by headlines, or unsure about your next financial move, now might be the right time to pause, recalibrate, and reconnect with your long-term goals.
We’re here to help you take the emotion out of the equation and bring the focus back to what matters most.
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Jordan Hickey is a CERTIFIED FINANCIAL PLANNER® professional who helps clients create personalized financial plans. Based in Glastonbury and Wilton, CT, Jordan offers guidance on retirement, insurance, investments, and overall wealth management. Schedule a complimentary introductory meeting with Jordan.
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete, it is not a statement of all available data necessary for making an investment decision and it does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.