Why should an investor write a letter to his future self?

To avoid falling prey to emotions, investors should practice pausing between emotional triggers (like reading the news) and making investment decisions, says Chuck Riley, a financial adviser at Vanguard. But what to do during such pauses? We tell you in our traditional “Practice” section.

To "escape the tyranny of the present," you need to take a "mental journey" and think about how your actions today will affect you in the future, writes Gal Gershfield, a psychologist at the University of California. Gershfield's research , which spanned more than 15 years, shows that many people think of their future selves as other people and have weak associations with them. There is another study in this area with a similar result.

At the same time, several studies prove that the less a person associates his current self with his future self, the less effective his decisions are right now. Indeed, why do something useful now if you see yourself as a different person in the future:

• One of Gershfield's studies found that the less connected one is to one's future self, the less likely people are to save money.
• Another proves that students who are characterized by such splitting study worse.
• In another study involving Gershfield, scientists proved that this problem also reduces life satisfaction.

To strengthen your connection to your future self, you can try visualizing yourself in a certain number of years, describing in words what kind of person you will be. Another way is to write to your future self, and then write to your present future self. Thanks to this technique, schoolchildren, according to one study, increased their connection with their future selves.

Investors can also use the same technique, notes WSJ columnist Jason Zweig. Let's say you can't stop reading texts about AI, you think its potential is much higher than the markets see, and you're thinking about increasing Nvidia's share of the portfolio from 5% to 25%, Zweig gives an example. In a letter to your future self, describe in detail what you plan to do, why you think it makes sense, and what results you expect.

In a letter from your future self, imagine that a year will pass and you will live with the consequences of your decision. Will your happiness depend on Nvidia's stock price, Zweig suggests asking yourself. This exercise will most likely help you avoid making decisions that you will regret in the future.