Investing is a must if you are building wealth and trying to achieve long-term goals, such as retirement. At its core, investment involves increasing future consumption at the expense of current consumption. But despite its simplicity, investment is not actually easy. Emotions can cloud rational judgments, which can lead to poor decisions and ultimately bad outcomes.
Investments can sometimes feel very emotional and can start to affect your overall well-being. In fact, 43% of Americans have at least an occasional negative mental health impact, according to Bankrate’s 2025 Money and Mental Health Survey.
Some mental tips for navigating your investment environment can help you control your emotions and increase your chances of achieving your investment goals.
1. Accept that volatility is part of an investment
Many people are invested in stocks for attractive long-term returns potential. The S&P 500 Index has historically provided an average annual revenue of around 10%, making funds tracking the index a staple in the retirement portfolio. But people rarely stop and think about why these returns are available.
Stocks do not rise 10% each year. Returns tend to be very unstable, sometimes rising quickly, while other times drop dramatically. However, this volatility, or risk, creates an attractive long-term return opportunity. So, know that when stocks fall or enter the bear market, this is expected and part of the reason they are highly compensated for their share ownership.
Some investors have an instinct to sell when things start to get worse, but by staying calm and continuing to invest, you can earn future rewards.
2. Set realistic goals
The important part of achieving your investment goals is setting realistic goals in the first place. If you start thinking that it generates 15 or 20% investment returns each year, you are likely to be disappointed, which can lead to a decline in decision-making, such as taking excessive risks.
While returns expectations should be driven by investments held in the portfolio, for most investors with stocks that make up the majority of the portfolio, a long-term return of 6-8% is a reasonable assumption. If your stocks make up 100% of your portfolio, you may be in that range early in your career, but you may find your return falls as you approach retirement and your portfolio moves to bonds and other fixed income securities.
3. Ignore short-term forecasts
The world of investment is full of people who claim to be experts and are willing to predict where the stocks, the market as a whole, or the economy is headed next. These predictions may be interesting, but the truth is that no one can accurately predict the future. Many people making predictions are not paid for whether they are right or wrong, so there is no consequence of being wrong.
These predictions can be difficult to ignore. Because they are often made by impressive individuals who make strong arguments. However, ignoring the temptation by market commentators to trade all new forecasts could lead to better outcomes in the future.
4. Save – That’s an important part of your investment plan
Investment is attractive to many people because of its power to grow wealth over time. By investing at a high rate of return, the power of compounding can turn small amounts of money into vast amounts over time. However, the return you earn from your investment is a difficult variable to control. One variable you can control is the amount you can save.
It is true that if you earn 15% annual revenue over 30 years compared to an 8% return, you will need to save, but you cannot predict the rate you will earn in advance. A better approach is to save money by assuming you get lower returns and get a higher return, assuming you’ll be surprised at how amazing it is. You may be able to earn more money and retire early in your golden age or live a more epic lifestyle.
5. Don’t try to reserve time in the market
When the economy starts to slow down and you are concerned about the possibility of a rise in the recession, it is appealing to sell some of your investments and wait for a better time. However, this strategy has some flaws.
First, it is dangerous to assume that you can know when a recession or slowdown is coming. That’s often the concern about slowing down. It’s a concern, and a recession doesn’t actually happen. People predict more recessions than they actually happen, so they can get out of the market for no reason.
Second, if stocks drop due to the recession, it is difficult to assume that you can identify when to return before it recovers. This includes reinvestment in many cases when the economic outlook is at its darkest. Can you imagine the unemployment rate hitting a new high and corporate revenues are declining? For most people, the answer is no.
Consistently investing over time through dollar cost averaging can be a better strategy than market timing. Index funds are a great way to invest consistently over time.
6. Accept the mistake and proceed
Research shows that investors tend to hold on losing their investments for a long time, expecting recovery or destruction. However, this can damage your portfolio by dragging the overall return and not being able to move your money into more promising opportunities.
I don’t like to admit that they’re wrong, but realizing it quickly and accepting that you’ve made a mistake is a good investment habit to adopt. People want to wait to sell the loser investment until they return to where it was bought, but if the problem that became a loser persists in the first place, it may never happen.
“A very important principle of investment is that you don’t have to get it back in the way you lost it,” legendary investor Warren Buffett told shareholders at the 1995 Berkshire Hathaway Annual Meeting. “And actually, it’s usually a mistake to try and get it back in the way you lost it.”
7. Don’t think you know more than you
Additionally, investors tend to be overconfident and may take on inappropriate levels of risk. Overconfidence can lead investors to think that by selecting individual stocks or making a particularly large share of their portfolio, they can win the market. It’s extremely difficult to beat the market – most experts fail at this task – and focusing your portfolio on just a few shares may increase your risk.
It is important to note that you will slowly and steadily win the investment race, even if it is not the most thrilling approach. Don’t try to swing for the fence when you think you’ve found a solid winner. There is always a possibility that you are wrong, and preparing for this possibility guarantees you will risk your long-term goals with one or two wrong moves.
Conclusion
Almost everyone needs to invest in achieving their financial goals. Investing may help you lead you to wealth and independence, but there are plenty of opportunities to travel along the way. You will either plan for your own financial advisor or work hard to stick to that plan without being influenced by market volatility, short-term forecasts, or other distractions. Learning these tips can make you more likely to develop an ideal way of thinking for your investment and achieve your long-term goals.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. Furthermore, investors recommend that past investment products performance is not a guarantee of future price increases.
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