Could Psychotherapy Help You Invest Better? 4 Exercises to Try

Research shows that, when facing uncertainty, investors can be prone to certain habits which could have a negative effect on their total long-term returns¹. Kate Robson, Toronto-based psychotherapist, might have some tools to help. In her first book, Something to Hold Onto (which features a forward written by Canadian director and actor Sarah Polley), Robson shares simple tools that you can use when navigating challenges or uncertainty. In her practice, Robson has found that metaphors and images are effective tools for gaining self-mastery. They are straightforward and give us something to hold onto when we feel overwhelmed. In a recent interview with Inspired Investor, Robson shared several of these tools and how they could help investors.

Iceberg beliefs

Each of us have “iceberg beliefs” about how we believe the world works. These are “ideas that we may not even know we have [that] come to us through family and culture [and] govern our sense of what’s right and wrong,” says Robson. We may have these beliefs about money, and they could influence our approach to investing.

One way to uncover your iceberg beliefs about money is asking yourself “fill in the blank” questions, such as:
• In my family, people who cared about money were seen as [blank].
• In my culture, the worst thing you can be financially is [blank].
• In my family, if I asked for something, the answer was usually [blank].

When doing this exercise, Robson recommends noticing when the belief is especially strong or morally charged. “Do you attach virtue or shame to having a lot of money, or to being ambitious, generous, frugal or in debt? If we have a strong response to a question, it often means that money is standing in for an important core value,” she says. The key is to observe our answers with a neutral lens, and not judge them.

“Our money principles are quite adaptive. We developed them to serve a function,” she adds. For example, if money was scarce during childhood, we may be overly frugal or extremely risk averse in our investment choices today. However, being too risk-adverse could negatively impact our retirement savings goals. Gaining a better understanding of the organizing principles we have about money can help us to make more intentional and less reactive choices. “The key is to be psychologically flexible,” says Robson.

‘Imagine a school bus’

Imagine that you’re a bus driver, and as you look around you, you see that your passengers are all different parts of yourself. One might be your snarky fifteen-year-old-self, and another your high achieving adult self; there might be a part of you who is afraid, or a part of you who is a good friend. “All these parts get to be there. No one gets left behind,” says Robson. But the different parts of you might all be shouting different directions. Your teenage self might not want to get off the bus, the high-achieving part might want to go faster, and the afraid part might want to turn around. Robson says that it’s the integrated, self-aware ‘you’ that makes the decisions. The driver can’t do what each of the passengers wants, or the bus won’t get to where it needs to go. This metaphor helps us do two things: 1) to disengage from distracting and temporary thoughts and feelings represented by the noisy passengers, and 2) to stay connected to what is most important – our destination.

Investors also often have multiple, sometimes contradictory, needs and wants. Part of you might be unsure or afraid, while another might be very ambitious. Before making an investment decision, it can be helpful to determine what your destination, or ultimate goal is. And if you notice any part of yourself, trying to grab the steering wheel, it can be helpful to remind yourself that only you can drive the bus.

‘Imagine some scaffolding’

When a building is undergoing construction or repair, scaffolding helps support the structure. Simple personal rules or behaviours are like scaffolding because they create a structure we can fall back on.

The scaffolding metaphor is based on what Robson calls “gentle rules”, which are personalized guidelines. For investors, she says these might include setting a specific trading window for yourself; waiting a set period of time before making a trade; not using a mobile phone to transact; keeping an investment diary and writing down the rationale behind investment decisions before trading; or earmarking a certain amount of money for speculative investments.

To temper the sense of urgency that can lead to too frequent trading or chasing the market, Robson recommends naming thoughts: “I’m noticing myself having this thought. My mind is telling me a story about money right now.” The process of naming puts emotional distance between the thought and the action. “It sounds simple, but these kinds of phrases give us space to hit the pause button. ‘Urge surfing’ describes a state where we can sit with the impulse but not act on it in the moment until we figure out the ‘why’ of the decision,” she says.

‘Imagine a computer’

We’ve all had the experience of our computer slowing down or freezing. This usually happens because there are many apps running in the background. Once the extra apps are closed, the computer functions better.

Decluttering our investments can similarly make it easier to track progress. Having too many different accounts in different places can be like running too many apps in the background – extra activity that doesn’t raise productivity. At tax time, for example, it could be problematic to have to many accounts in too many different places.

If you feel as though you have too many different accounts, and that’s causing stress or anxiety, you could consider consolidating your accounts across fewer financial institutions to help simplify them.