Emotions affect financial decisions from "summary" of The Psychology of Money - Gujarati Edition by મોર્ગન હાઉઝેલ
Our emotions play a crucial role in the decisions we make about money. We may think that we are rational beings who make logical choices based on facts and figures. However, the truth is that our emotions often drive our financial decisions more than we realize. When we feel fear, we may be more likely to make decisions based on avoiding losses rather than seeking gains. This can lead to missed opportunities for growth and wealth accumulation. On the other hand, when we feel overconfident, we may take unnecessary risks that can result in financial setbacks. Our emotions can also influence how we perceive and respond to market fluctuations. In times of volatility, we may be tempted to panic and sell off our investments in a knee-jerk reaction to fear. This can result in selling low and missing out on the potential for future gains when the market rebounds. Moreover, our emotions can affect our long-term financial planning. For example, if we feel anxious about retirement, we may be more likely to make impulsive decisions about saving and investing without considering the long-term consequences.- We can make more informed and rational decisions that align with our financial goals. Ultimately, mastering our emotions can lead to greater financial security and success in the long run.
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