If you follow the developments regarding investment or investment research, financial behavior was very instrumental in making one's decision regarding investment. Financial decision making, will be strongly influenced by emotion or behavior of your knowledge with regard to investment.
Fear
In terms of investment, fear is defined by the absence of a sense of confidence in capital markets. Many people feel that by investing in the stock market they fear the loss or even lose money in full. But you also know that the drastic decline that occurred in the capital markets certainly influenced by other causes which are also great.
Fear of other individuals to invest in the stock market is the high level of volatility. Or changes in price rises and falls very big and fast. Perhaps this is true, but I want to share their views and knowledge in this regard. One illustration, how you will measure the distance from your house to the office, whether in mm or in km? For those who see the price change from day to day fund-month-Moon probably will conclude that investing in the stock market is very risky due to changes in the rise and fall are very big and fast.
In the short term it appears that the market is very large changes in the rising and falling. But if pulled its investment period will be seen that the capital market is not risky as you might think. Each investment must have at risk, as well as investing in capital markets, but with a longer period of time, capital markets provide an opportunity to provide an adequate rate of return with risk goes unmeasured. Most of the players or investors in the capital market in Indonesia is a short-term players. So that they strongly believe that the very high capital market volatility. Now try to see from a longer period of time, and continue to invest.
Greed
Greed can be interpreted as too high a level of confidence of capital markets and other investment vehicles, and this is very dangerous to your family's financial health as well as fear.
Investors who had long been in the capital markets often feel very confident with the choice of investments, so they often ignore that the stock price of a stock also declined. When investing in shares a lot of people who are very confident and focused only on the level of expected returns and risk forgetting that also contained therein.
Regret
One other thing which we think is also very influential is a sense of regret. In this case can be interpreted as an expectation that you do not do what ever you do in investing.
As an illustration, we try to give examples of what people do to avoid regret. Say that you and your brother in the same financial situation and in the same investment behavior as well. Suddenly, your parents died and left 100 million in the form of deposits for you and 100 million in shares to your brother. You and your brother do not feel comfortable with this investment, investment in the form of deposits are too conservative for you and play on the stock is too risky for your sister, what do you think will be done by these brothers? The biggest possibility is that they will not do anything with that investment.
Why? because on one hand you feel when transferred in other forms of investment and in fact suffered a loss, then you will feel that you are wrong in taking action and will feel remorse. To avoid this they did not do anything. So it is with your brother, by moving investments from stocks, your brother scared the capital markets will provide a big advantage in front, which will make regret. With this in mind to avoid regret your brother did not do anything with the investment of such heritage. This is illustasi and very possible.
Many investors who do things that make no sense to avoid regret. Many of those who maintain stocks declined sharply from its value in the hope of going back up and get back their capital. They assume that if they do not sell these shares, they feel that they do not feel loss. By selling these shares is tantamount to saying that they failed and the failure mengakitkan remorse.
Action in making decisions based on emotion is very risky and can result in losses. Let's say you invest Rp 10 million in stock, and the stock declined drastically resulting decline in value by 50% to Rp 5 million. You will not be sold, with the thought that by selling you admit your mistakes. so you still hold on and wait until the shares are returned to previous price levels.
We hope with this exposure, and an explanation some financial behavior that is influenced by emotions such as above can help you identify these behaviors so as to reduce the financial decisions based on emotion alone and began to count them financially. Hopefully useful.
source of Mohammad Ichsan
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