I'm going to say something mundane or even old school, but people in the business world take notice portfolio stability the most important factor in investment. Is this the right move? If you are a rational investor with a long-term vision, the answer is most likely yes.

But let's be honest: does it really matter how diversified your portfolio is if you can't handle your emotions when the market starts to fall and your assets are losing value? Financial success it is difficult to achieve without emotional stability (there are exceptions, of course). While diversification is a key tool for risk management, an investor's ability to remain emotionally stable is just as important.

Staying cool isn't just about keeping it together when things get rough; it's also about making thoughtful decisions when everything seems to be going off the rails. From my professional and personal experience, I have learned this mental stamina it is a necessity. In many ways, it's what actually makes the big money stuff work.

Related: How to calm financial panic during rising inflation

Portfolio diversification does not guarantee peace of mind

Perfect diversification is considered the platinum standard in investment practice. The simple magic behind this statement is that distribution of assets across stocks, bonds, real estate or startups helps reduce risk.

When a small part (or a large one) loses value, the others remain stable or even gain, minimizing the overall losses. And we – investors – like it when the potential risks are down. This strategy is how business people deal with crises, political instability and other uncertainties.

But here's the catch: no amount of diversification it will protect you from market turbulence. It's just not possible, period. During difficult economic uncertainty, even the most diversified portfolios face great pressure.

The COVID-19 pandemic in 2020 is an example, as it hit many sectors at once. Even those who followed every diversification rule felt the pain. Some fortunes have since recovered, while others are still struggling, but for the time being, all have suffered.

Emotional discipline should be emphasized here. Investors who can't control their emotions often hurt their portfolios more than the market itself. Panic selling during a crash or overly optimistic buying at a peak are common mistakes that lead to avoidable losses. Diversification is worthless if you cannot take advantage of it with a clear and consistent mindset. That makes sense, doesn't it?

Related: How to embrace life changes and develop your sense of purpose

Emotional resilience is a soft skill that we all need – but investors more than others

We are all familiar with soft skills, right? Adaptability, communication and stress management – have become essential to success in business. But what if I told you that investing has its own soft skills? Yeah, that wouldn't be a surprise. However, one of the most critical is emotional resilience, a skill that plays a key role in decision making.

Emotional resilience helps investors stay calm, even during market turmoil. When markets are volatile, or a startup faces unexpected challenges, this skill allows you to maintain strategic focus and avoid panic. A calm mind leads to rational decisions – that's what seems logical to me.

Instead of reacting impulsively, an experienced investor uses this ability to analyze the situation and assess its impact on long-term goals. In theory, this approach prevents hasty decisions and helps spot opportunities where others see only risks. Surprisingly, when it comes to real practice, it works exactly the same.

The financial market is about change – that's an unshakable fact. Markets rise and fall, startups succeed or shut down, and even the most skilled players can be blown away by chaotic headlines. In these moments, emotional control becomes the defining skill that separates successful investors from those who succumb to panic.

How do you develop this soft skill?

Emotional resilience is a soft skill and that means it can and should be trained and cultivated. Here are some simple methods I use to strengthen this soft skill every day:

• Create a clear plan. A detailed and well-thought-out strategy reduces uncertainty. When you and your team have a plan, you know what to do in any situation, making it easier to stay the course. Make sure you have a plan B, C and D as well.
• Learn to accept volatility as normal. MArKets it will always fluctuate – it's just a part of the game that we can't change. Take a breath! Accepting this as inevitable helps prevent emotions from controlling your decisions.
• Belief in diversification. If you have allocated your assets wisely, you already have built-in protection against significant losses. When the markets get choppy, remind yourself of this.
• Surround yourself with professionals. Working with experienced financial advisors or partners can help lighten the load. Outside advice often provides a more objective view of the situation.

Emotional resilience and diversification are complementary, traveling on different paths to the same goal. While diversification protects your portfolio from market risks, emotional resilience protects you from yourself. An investor's health – both financial and psychological – is the foundation for long-term success.

In the end, investing is about being confident in your decisions, even when everything around you suggests otherwise. Strengthening your emotional resilience may be the best investment you can make in yourself!