Source: Gelong Hui

Author: Lao Youji

As we all know, investment is not a simple thing. There is a wide variety of information, but there is a dazzling array of investment methods. Some investors think that by using all these investment methods, they can make money in the investment. After a round of operation, they do not earn much money, but they first get tired and fall into the strange circle of "mental internal friction."

Investment, like other jobs, requires both physical and mental expenditure. The use of various investment vehicles may be the icing on the cake for investing in life, but it undoubtedly requires mental and emotional resources. When excessive consumption of mental and emotional resources, people will feel tired, and then easily because of the rise and fall of the market, become scared and greedy. At this time, if you want to put aside the complicated investment methods of "governing by doing nothing", you will feel unwilling; if you continue to adhere to those investment methods, you will feel suffering and suffering. How to maintain peace of mind and avoid mental internal friction in fund investment is really a distressing problem.

In fact, there are a lot of mental internal friction in fund investment, but they are all inseparable from several aspects: worrying about the volatility of the market affecting the return of the fund, paying too much attention to the buying and selling opportunity for fear of missing the return, always thinking about how to better combine the funds in hand, and so on. If you want to avoid mental internal friction when investing in funds, you can appropriately put down those investment methods and lower your investment expectations.

First, take the initiative to adjust the position and not be led by the nose by market sentiment.

Investment is against human nature, and we can "make a bottom" for ourselves in advance of the rise and fall of the market. Take the CSI 300 index as an example, the annualized volatility in the past one to five years is 20%, so we can think that the maximum rise and fall of the fund should be similar to the market index, also about 20%, as long as the rise and fall of the fund does not exceed this range, should be acceptable. For some volatile sectors, such as chips, semiconductors, pharmaceuticals, etc., if we hold funds in these sectors, then we can think that the acceptable volatility of these funds is 25% or even 30%.

After bottoming out, as long as the volatility of the market does not exceed the acceptable range, we can think that it is reasonable and acceptable. In this way, we can be calm when there is a big correction in the market.

In addition to "bottoming out" ourselves in terms of volatility, we can also determine the position of our investment according to the extent of pullback that we can accept.

For example, if the largest withdrawal in the history of our fund is 20%, then we can set a set of standards for ourselves: do not move when you withdraw 5%, increase your position by 20% when you withdraw 8%, increase your position by 25% when you withdraw 10%, and sell when you go up 8%.

In this way, we may be able to be cautious and patient when the market sentiment is overheated or the overall market valuation is high, and be able to lay out calmly when the market sentiment slows down or even slightly pessimistic. Do not be led by the market by the nose, the mood will not rise and fall because of the market fluctuations, and the degree of mental internal friction will be reduced.

Second, reduce the frequency of transactions, do not have to seize every market

Some investors hope to seize every market in the volatility of the market, "buy at the lowest, sell at the highest" and earn every dollar brought about by price fluctuations, but this may only be "wishful thinking". First of all, no one may be able to seize the opportunity brought about by every price fluctuation, and there is no way to predict the top and bottom of each market. If you want to catch every market, you need to keep an eye on the price trend all the time, and you need great judgment.

For ordinary investors, they still need work and life every day, and it is not easy just to deal with work and life. If you still have to squeeze out time and energy to invest, you will feel tired when you think about it.

In addition, if excessive pursuit of timing, frequent transactions, will bring a lot of transaction costs. Take public funds as an example, many funds need to hold for a week or even a month to waive the redemption fee. The shorter the holding time, the more redemption fees need to be paid. In this case, the cost of the exchange may already exceed the profit, not to mention the high frequency of foreclosure does not guarantee absolute profit. As a result, it does not make much profit, but consumes a lot of time and energy.

Fund is a kind of long-term investment tool, from the point of view of fund design, it is not suitable to be "worried" by ordinary investors. If you want to make short-term investments, stocks may be a more suitable choice. As the saying goes, "the last part is the most difficult to complete", and so is the investment in the fund, which needs to be held for a long time and wait for the "rose of time". At the same time, we should not underestimate the difficulty of fund investment. When the market is in the doldrums and the fund investment is not profitable, the investment portfolio can be optimized through fixed investment and mutual asset allocation of stock and debt bases.

All in all, as ordinary investors, they will inevitably encounter setbacks and even mental internal friction when investing in funds, as long as we face it with a positive attitude, do not be affected by the mood of the market, maintain a peaceful state of mind and continue to accumulate experience. I believe that the foundation brings us ideal feedback.

Edit / Julia