It’s time to uncover how liberating yourself from the need for external validation can result in a more content and self-assured investing journey.
The Context
Do you ever find yourself confused about whether to follow the investment advice everyone else seems to be taking or to trust your own gut feeling?
It’s not easy to navigate the world of investing, especially when there’s so much external pressure and financial information out there. Finding your confident approach to investing can feel like a real challenge.
As humans, we often seek validation from others to feel good about ourselves and gain confidence. This is especially true when it comes to investing our hard-earned money. It’s okay to be aware of this idea and play along to fit in with society. But, being overly dependent on others‘ approval can cause issues for investors.
In case you haven’t read our previous posts, behavioral finance is one of our favorite topics. It’s a fascinating field that looks at how human emotions, biases, and thinking mistakes can affect the decisions we make about money and investments. By combining psychology and finance, we aim to empower our readers with valuable insights into why people sometimes act differently from what traditional and tested financial theories suggest.
In this guide, we’ll reveal why we seek validation, talk about its downsides, and discover how regular investors can gain more confidence and happiness by freeing themselves from this need for approval in their investment choices.
The Need for Approval
We all have a natural desire for others to recognize and appreciate what we do. It feels great when people acknowledge our actions, thoughts, or hard work.
To put it simply, imagine yourself standing on a stage with a large audience, receiving an award for your achievements— feels nice doesn’t it? This kind of feeling can also be seen in our daily lives, especially on social media, where people seek validation and approval from others through likes, comments, and shares.
On the other hand, internal validation allows us to feel good about ourselves by analyzing our own behavior, work, competencies, ethics, and appearance.
In the world of investing, the need for approval can cause various issues.
1. Following the Masses
When investors seek validation from others, they might end up following the crowd and making popular, but not necessarily well-thought-out, investment decisions.
Let’s say everyone is talking about and investing in a specific stock. The news, analysts, and media outlets are all buzzing about it. In such a situation, an investor might feel pressured to jump on the bandwagon without taking the time to do thorough research on the stock.
2. Fear of Taking Risks
When investors fear disapproval from others, they become afraid of taking risks. This fear can hold them back from grabbing potentially profitable opportunities.
For instance, an investor might decide not to invest in a promising new technology company just because others are unsure about it and express skepticism.
3. Ignoring Personal Goals
If investors rely too heavily on seeking approval from others, they might end up neglecting their own financial goals and preferences.
For example, an investor might choose to invest in real estate or cryptocurrency simply because their friends are doing it, even though these investments don’t align with their long-term financial plans. This can be risky as it might not be the best choice for their individual financial situation.
Now, here comes the next question that often leaves many people puzzled. But don’t worry; we’ll take it step by step and address this challenge together.
Breaking Free from External Validation
To become a confident and content investor, it’s essential to overcome the need for external validation. Here’s how you can do it:
1. Trust Yourself
In our value investing philosophy, we strongly advise against checking your investment portfolio daily or frequently accessing financial news. We believe it’s best to avoid getting influenced by the constant chatter from social media or television experts. Instead, focus on a more long-term approach to investing based on solid fundamentals.
To gain this confidence, the first step is to carefully learn the rules of the game. Once you’ve mastered them, believe in your own judgment and abilities. Understand that you can make well-informed decisions based on your research and knowledge.
2. Embrace Individuality
You don’t need to prove yourself to anyone as you are unique and special in your own way. Remember, each person’s investment journey is different. Don’t hesitate to make choices that align with your own financial goals and comfort level with risk.
Trust yourself and stay true to what feels right for you.
3. Learn from Mistakes
Yes, we do make mistakes, and sometimes quite a few of them. However, rather than being afraid of making mistakes, view them as valuable chances to learn.
It’s important to remember that every investor makes errors, and that’s completely okay as long as we take the opportunity to learn from them and grow wiser in our investment journey.
4. Seek Advice Wisely
In the world of investing, the only thing that comes for free is advice— don’t you think?
While seeking guidance is crucial, it’s essential to be picky about whose advice you take. Look for input from reliable mentors or experienced investors who genuinely care about your best interests. Their guidance can be truly valuable in helping you make wise investment decisions.
Here’s a fun social psychology experiment that you’ll surely enjoy! It promises to be an exciting and interesting experience. Just mention to your friends that you’re thinking of buying a new car, and get ready for an avalanche of unsolicited suggestions about the perfect make, model, color, and engine capacity. People love to offer their opinions and act like experts when it comes to buying a car!
5. Set Clear Goals
Investing with confidence is like playing a game of averages. If you consistently do well over time, you’ll achieve the enlightenment you seek.
To succeed, start by defining your investment objectives and crafting a well-planned strategy to reach them. Remember, achieving financial goals is not about doing something massive all at once; it’s about making steady progress, step by step.
Make decisions based on your goals rather than seeking approval from strangers. Stay focused on your plan, and you’ll find success in your investment journey.
Conclusion
It’s only natural for humans to seek validation from others, but in investing, relying too much on external approval can cause problems. To become a happier and more confident investor, it’s essential to trust your instincts and make decisions that match your own financial goals.
True validation comes from within, and by freeing yourself from the need for external approval, you can confidently navigate the world of investments and create a brighter financial future for yourself.
We aim to help you become a mentally strong and successful investor in the long term through our writings. We’d love to hear your thoughts too, so feel free to use the comments box below to share your opinions. It’s all yours!
🔔 Invest wisely!
