Judging from the way stock markets are reacting these days,the world has indeed gone for a toss.
But, as a renowned person claims, “If you can't live with the current uncertainty and volatility in the stock markets, you must not be buying stocks at all”.
According to the author of Emotional Intelligence, success is more closely tied to emotional intelligence than education or knowledge
The two key aspects of emotional intelligence which will keep you from abandoning your investment strategy in a panic are: -
• Impulse control, and
• Persistence.
It is fear and greed that causes dramatic short-term swings in stock prices and as such, this situation is likely to continue for a while.
As an investor, it means holding on to your head when others around you are losing theirs, you need to use your EQ, not your IQ.
How to be emotionally intelligent?
Here are three ways you can use your emotional intelligence while investing in stock markets: -
• Have realistic expectations
Avoid expecting the world to end and the markets to close down during panicky times like what we're seeing now. Things always get normal. It only takes time.
• Resist the urge to push the panic button
Resist the temptation to 'do something'. Resist the urge to push the panic button. Your impatience can turn out to be a bigger disaster for your portfolio than any stock market crisis.
• Automate your investments
If you're just starting out on your investment journey and have many years left for accumulating wealth, use a discipline like dollar-cost averaging -- investing a consistent amount at regular intervals -- to take advantage of the market's occasional volatility.
A systematic investment plan (SIP) in a good mutual fund can help you do that.
Source: http://www.rediff.com/business/slide-show
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