Reacting to short-term news can do more harm than good, pushing you to invest emotionally or err more conservatively than you should, writes Jonathan Ponciano for Investopedia.
Ponciano writes, “Constantly worrying about your finances because of the latest headlines rarely pays off—and it can even be detrimental to your financial well-being. ‘Making decisions based on recent news leads you to chasing returns, and that can be harmful to a retirement portfolio,’ says Den Murley, a financial planner at Belonging Wealth Management.
“Emotional investing can also lead you to holding too much cash and missing out on crucial returns and compounding. ‘Not to mention your quality of life is on a constant emotional roller coaster,’ Murley adds.
“Kevin C. Feig, founder of Walk You To Wealth, compares it to horse racing. ‘If you’ve ever watched the Kentucky Derby, you’ve likely noticed that horses typically wear blinders. This same concept applies to building wealth: It requires you to stop dwelling on the past, ignore present distractions, and concentrate on the path forward,’ he says.”
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