Psychological returns

Profits and tax avoidance can powerfully motivate your investment selections. However, like with other life decisions, you need to consider more than
the bottom line. Some people want to have fun with their investments. Of
course, they don’t want to lose money or sacrifice a lot of potential returns.
Fortunately, less expensive ways to have fun do exist!
Psychological rewards compel some investors to choose particular investment vehicles such as individual stocks, real estate, or a small business.
Why? Because compared with other investments, such as managed mutual
funds, they see these investments as more tangible and . . . well, more fun.
Be honest with yourself about why you choose the investments that you do.
Allowing your ego to get in the way can be dangerous. Do you want to invest
in individual stocks because you really believe that you can do better than
the best full-time professional money managers? Chances are high that you
won’t. Do you like investing in real estate more
because of the gratification you get from driving by and showing off your properties to others than because of their investment rewards? Such questions are
worth considering as you contemplate what investments you want to make.