4 Ways Emotions Ruin Smart Investing With Dr. Art Rainer

Don’t Let Emotions Derail Your Investments

When it comes to investing, emotions can be your worst enemy. Allowing emotions to guide your investment decisions will most likely lead you to buy high and sell low. That’s the opposite of building a solid retirement fund.

So how can investors avoid the emotional traps that derail wise investing? Here are four common ways emotions can ruin sound investment strategies.

1. Focusing on the Present Instead of the Future

The stock market fluctuates daily, sometimes even hourly. Many investors get caught in the drama of short-term swings. But we must remind ourselves that we’re not investing for today, we’re investing for the future.

Keeping your eyes fixed on long-term goals helps put temporary volatility in perspective. The market may dip, but over time, patience and consistency are what build wealth.

2. Letting Fear Take Control

Fear often shows up during a market downturn. In 2008, as markets plummeted, many investors panicked and withdrew their money. Later, most admitted that the decision was a mistake.

In fact, steady contributions during down markets actually allow for the purchase of more shares at lower prices—a benefit to long-term investors. This is a process called “dollar-cost averaging”.  

Dollar-cost averaging is an investing strategy where you contribute a fixed amount of money at regular intervals, regardless of market conditions. Over time, this helps reduce the impact of market volatility by buying more shares when prices are low and fewer when prices are high.

Fear may feel protective, but it usually leads to missed opportunities.

3. Becoming Overconfident in a Rising Market

Just as fear hurts during downturns, overconfidence can be just as dangerous when markets rise. We saw this during the dot-com bubble in 2000 and again in 2020.

As stock prices climb, inexperienced investors often rush in, assuming the market is “easy money.” They may chase riskier investments without understanding the dangers, setting themselves up for painful losses when the bubble bursts.

4. Dwelling on Regret

Regret over past decisions is natural, but it can tempt us to overcorrect. For example, selling too soon because of a bad memory from the last downturn—or holding too long trying to “make up” for past mistakes.

Instead of being trapped by regret, let past experiences guide wiser choices without driving reactionary ones.

The Bible tells us that saving is wise, but it also cautions against letting fear or greed rule our hearts. Wise investing requires patience, discipline, and trust in God’s provision—not reactionary emotions.

Get Help From a Certified Christian Financial Counselor

On Today’s Program, Rob Answers Listener Questions:

• I’m trying to help someone who has three credit card debts that have gone to collections. What type of documentation should we request to confirm that the debt collector is legally entitled to collect the debt, especially since different agencies continue to contact us?
• I’m retired and have recently purchased a property with mold in the crawl space, which is impacting my health. Given my financial situation, would it be wise to borrow money to resolve the mold problem?
• My husband is about to turn 73, and we’ve placed all of our IRA funds into an annuity. How do we calculate the required minimum distribution once he reaches 73, and does that amount change each year? We’d like to withdraw only the minimum necessary.

Resources Mentioned:

• Faithful Steward: FaithFi’s New Quarterly Magazine (Become a FaithFi Partner)
• The Institute for Christian Financial Health
• Christian Money Solutions
• Wisdom Over Wealth: 12 Lessons from Ecclesiastes on Money
• Look At The Sparrows: A 21-Day Devotional on Financial Fear and Anxiety
• Rich Toward God: A Study on the Parable of the Rich Fool
• Find a Certified Kingdom Advisor (CKA) or Certified Christian Financial Counselor (CertCFC)
• FaithFi App