November 2025 insights
Aspirations Wealth constantly monitors the investment markets and aims to keep our valued clients regularly informed and updated. We aim to help investors cut through all the media noise and hype and understand what is really driving investment markets and portfolio returns.
This month, we explore a topic that affects every investor:
How our emotions can influence investment decisions.
The Emotional Side of Investing
Investment markets are not driven by fundamentals alone, investor sentiment plays a huge role. It’s common to feel anxious during downturns and euphoric during rallies. The “rollercoaster” of investor emotion can lead to costly mistakes, such as selling at the bottom or buying at the top. Recognising these emotional cycles is the first step to making better decisions.
Why Emotions Matter
Research shows that emotional investing often leads to underperformance. When we react impulsively to headlines or market drops, we risk missing out on long-term gains. This is often due to common behavioural biases, which is systematic patterns in our thinking that can cloud judgement and lead to poor decisions.
Key behavioural biases include:
Loss Aversion: We feel the pain of losses more strongly than the pleasure of gains. This can lead to holding onto losing investments too long, hoping they’ll recover, or avoiding investing altogether for fear of short-term dips.
Herd Mentality: The tendency to follow what others are doing, especially during market booms or busts. This can result in buying high (when everyone else is optimistic) and selling low (when panic sets in).
Confirmation Bias: Seeking out information that supports our existing beliefs and ignoring evidence to the contrary. For example, focusing only on positive news about a favourite stock.
Overconfidence: Overestimating our own knowledge or ability to predict market movements, which can lead to excessive trading or risk-taking.
Recognising these biases is the first step to making better investment decisions.
Practical Tips for Staying on Track
Recognise emotional triggers: News headlines, sudden market drops, or “fear of missing out” can prompt rash decisions.
Focus on your long-term plan: Short-term volatility is normal, but staying invested is key to building wealth.
Remember the power of compounding: If you invested $10,000 in Australian Shares 10 years ago and earned an average return of 10.60% per year, your investment would have grown to around $27,387 today, demonstrating the value of staying the course.
Don’t try to time the market: Missing just a handful of the best days can significantly reduce your returns.
Diversify your portfolio: There is no single “safe haven”, spreading your investments across different asset classes is the best insurance against market uncertainty.
Staying disciplined and informed, with the support of a professional team, is the best way to navigate uncertainty and achieve your long-term financial goals.
Any advice contained in this insight/update is general advice only and does not take into consideration the reader’s personal circumstances. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances. When considering a financial product please consider the Product Disclosure Statement. Aspirations Wealth Group is a Corporate Authorised Representative of Aspirations Private Wealth Pty Limited. ABN 57 622 182 076 – AFSL 503889.