What motivates people daily is one of the most difficult things to predict.
You can either be rationally committed to your work, family, friends, life etc., etc., or emotionally.
A rationally committed employee is for example exchanging his time for the organization’s compensation for it.
An emotionally committed person on the other derives a higher purpose from the association and have a passion not just for the work but also for the organization.
The Times of India recently highlighted the case of a techie who was working for 7 firms simultaneously thanks to work from home.
It was only discovered when HR manager of one of those firms while verifying his Provident Fund (PF) account discovered multiple active PF accounts.
Clearly this person was not looking for a higher purpose.
He was exchanging his wares for money.
Emotional commitment is a positive to the recipient of the commitment whether organization, family, or friends.
The Other side
Emotions create attachment and attachment creates expectations.
End of the day whether it’s an organization or a relationship, there is a give and take.
As Stephen Covey writes in the “7 Habits of Highly Effective people”, relationship “give & take” is like entries in a passbook.
When you deposit 100 dollars in the bank, it reflects 100 dollars, however in a relationship, you 100 dollars could be more and sometimes less than 100 dollars depending upon how much value the recipient attaches to your relationship gesture.
This creates dissonance and frustration.
Emotional Commitment in Investing
There are ways to resolve the dissonance of such emotional disconnects when dealing with people through dialogue and understanding.
However, when investors have to go through such disconnects it causes serious heartburn.
Many investors make an emotional commitment along with a financial one when they invest money in the markets. This is particularly true for high-asset investors, retirees, and investors whose main goal is to preserve rather than grow their funds.
A gallup survey in United States found something startling:
“52% of the investor admitted to mood swings caused by the daily state of their investment portfolio”
The challenge is emotional commitment.
I wrote a couple of months back how investors get seriously invested into their portfolio beyond the financial commitment.
The urge to come daily and show case the success of their portfolio to everyone and how they are the genius who found the next big thing before anyone else etc., etc.,
It is a vicious cycle, and it is easy to get caught up.
What should the investors do?
First thing first remember that your portfolio doesn’t know you are invested into it and has no emotional connect with you.
You are having a one-sided affair.
Like everything else in life, it is difficult to get disciplines about investing.
Whether its education, how you do your work, your fitness, excellence requires a certain degree of discipline.
Your disciple in not getting too attached to the portfolio’s outcome on daily basis is a practices art.
The consistency in your thought process is a practiced art and something that needs to be developed.
Stock market will go up and down, but your mood doesn’t have to.
Here are 2 thoughts to ponder on:
- It is fair that not everyone will have the same skill set to make investments, and as a 1st step admitting your actual competence level and keeping things simple will help.
- As a 2nd step, whether a gym, or workplace or studying, people have a buddy that makes it easier to study, workout or work with disciplines, hence having a buddy, mentor or advisor who can calm you down and help you practice disciple can be very valuable.
To reiterate, it’s not easy but then when was life easy.
Learning to enjoy the fruits of life at leisure is a luxury but one that you can develop with practice
All the best