The Psychology of Financial Investments

4 Tips for Making More Money in Mutual Funds, Stocks, or Bonds

Jun 3, 2009

You can make more money on your investments if you know your psychology and money personality! Here are four ways to increase earnings in mutual funds, stocks, or bonds.

Knowing the psychology behind your financial investments can increase your earning power, whether you’re investing in low-risk mutual funds, or medium-to-high risk stocks and bonds.

4 Tips for Making More Money With Your Investments

Know your parents’ investment styles. Did your parents invest in real estate, mutual funds, or a secure low-interest savings account? Your investment style, attitude about money, and financial perspective is shaped in part by the way your parents treated money in your childhood. To earn more money on your investments, separate your “money personality” from your parents’ financial attitudes.

Recall and relive traumatic experiences that limit your ability to invest. In The Investor’s Quotient: The Psychology of Successful Investing in Commodities and Stocks, Jacob Bernstein writes, “Very often traumas during early childhood or elementary school days will have an unconscious effect during adult life.” He suggests reliving bad experiences in a nonthreatening environment to release pent-up emotion. This can free your emotional and mental energy, and allow you to focus on your financial investments – which can translate to earning more money in mutual funds, stocks, and bonds.

Explore how your relationship affects your investment strategy. Whether you’re married, in a committed relationship, or single – how you view members of the opposite sex could affect how the psychology of your financial investments. “Very often the married male investor with children will be operating under the weight of heavy responsibility, which may paralyze him,” writes Bernstein. “Too frequently we fear negative responses from a spouse.” To make better investments, make sure you and your partner have a common purpose behind your motivation to earn money.

Determine your motivation for earning money. What are your short and long-term goals for investing your money? Do you want to retire early, buy a home with a view of the ocean, or pay for your kids’ college education? Before you attempt to increase your earnings, figure out your motivation and goals. Knowing where you want to be in one, three, five, or ten years will help you get there!

The psychology of financial investment isn’t complicated, nor does it require counseling. It’s simply a matter of figuring out your “money personality”, attitude, and style so you can improve your chances of financial success.

The copyright of the article The Psychology of Financial Investments in Psychology is owned by Laurie Pawlik-Kienlen. Permission to republish The Psychology of Financial Investments in print or online must be granted by the author in writing.