This is a summary of an article on http://monevator.com/coping-with-the-guilt-of-losing-money/. The author accepts it’s normal to feel frustrated, angry, or even downright stupid when you lose money on your investments. But what about guilt?
Here some tips that might help you if you’re also feeling guilty or giving in to bear market despair.
1. Don’t take it personally – The stock market doesn’t know or care that you were saving money for a house, or what you had given up. The world is a billion times bigger than our own investments, and our good or bad decisions. Market declines of 40% will leave anyone’s portfolio battered. A bear market is not your fault.
2. Accept declines are as inevitable as gains – The reason we’re surprised by big falls is, of course, timescales. Over the long-term a large loss in a single year might be expected, but you’d still only expect to encounter less than half-a-dozen instances in even a long-lived investor’s lifetime. And by the time we’ve understood the lesson, the good times have begun to roll again and we’re tempted to dismiss the big falls as freak events. But they’re not. Steep stock market drops are part and parcel of investing for stock market gains.
3. Hindsight is the greatest investor
4. If you can afford to, buy more shares – The key here is that you will feel a lot less terrible when your shares are falling if you know you’re also getting to buy good companies at great prices.
5. Treat it as a learning opportunity – Investors in this bear market might be hurting in portfolios, but they are receiving priceless experience by virtue of their ringside seat in financial crisis. Much as I am aware that hindsight is a great investor, I also think it can be a good teacher; I don’t intend to make the same mistakes twice. A few obvious lessons from the credit crisis: Beware opaque products; higher yield comes at a cost; Things can always get worse; don’t let returns derail your strategy:
The bottom line: Know why you’re investing, and don’t let gains as well as losses upset your path. Author believes you shouldn’t feel guilty about feeling guilty when looking at your portfolio – we humans are emotional creatures. But then close down your browser, turn off your PC, and take a walk until you’re ready to invest with your head, not your heart.
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