Why Emotions Matter in a Portfolio Strategy

A portfolio strategy usually starts with considerations regarding various asset classes, i.e. bonds, equities, cryptos, real estate, etc., as well as the risks you are prepared to take. The younger generation among us are usually expected to take a slightly higher risk than the older generation, as they can make up for any losses over a longer investment period. In addition, the investor's objectives are also traditionally included in the strategy. Some people invest to buy their own home or a luxury property later on, while others save for a holiday or retirement.

People do not make purely rational decisions

Have you already lost your appetite for investing? Many people feel that way, as these criteria are of course factually correct, but also totally unsexy. We humans do not make purely rational decisions. In fact, the current state of academic research confirms that all decisions are at least to a large extent influenced by feelings and emotions. This also applies to those of us who consider ourselves to be “the coolest and most rational people”. We decide emotionally and then justify our decisions rationally. (Source: Bigas, https://bigas.ch/entscheidungen-treffen/)

In other words, we should consciously approach the portfolio strategy emotionally from the beginning. “And that's how the whole thing really starts to be fun anyway,” say UMushroom founders Luba Schönig and Tonia Zimmermann, who have always been big fans of themed portfolios. On the one hand, these can be pure enthusiast portfolios or a portfolio strategy with a satellite approach.

Lea Katunaric's heart beats for chocolate

Lea from our team at UMushroom, for example, is an absolute chocaholic. She has followed their advice and created a "Sweet Tooth ” portfolio around her biggest vice, which currently includes Barry Callebaut, Nestlé and Lindt & Sprüngli. Unfortunately, she cannot invest in her personal favorite, Vollenweider, as the Winterthur-based chocolate manufacturer is not listed on the stock exchange. “There are portfolios that may perform better,” she says, but she has never had so much fun investing and trusts that chocolate and other confectionery will be in fashion in the long term. In recent times, she knows many people who have become very price-sensitive and chocolate remains a goodie that everyone can afford.

Invest a large portion in well-diversified ETFs and a supplementary portion in projects close to your heart

In principle, however, Luba Schönig and Tonia Zimmermann advocate choosing an essentially balanced strategy. This means investing a large part of your investment in well-diversified ETFs and then allocating a supplementary part of your investment to projects close to your heart.

Their heart's desire is to invest in companies that stand for a natural way of life as well as shares in the fields of artificial intelligence and quantum computing. You can view their portfolios on UMushroom and follow them continuously. Good luck and above all, have fun and enjoy investing!