Did you know that losing money in the stock market could cost you your life? A recent study published in the American Economic Journal found that “wealth shocks” “strongly affect physical health, mental health, and survival rates.” Pamela Yellen, financial investigator and two-time bestselling author, explains why even milder market losses can be hazardous to your physical and mental health.
Findings from Pamela on losing money in the stock market:
Hedge fund managers go about finding investment ideas in a variety of different ways. Some target stocks with low multiples, while others look for growth names, and still others combine growth and value when looking for ideas. Some active fund managers use themes to look for ideas, and Owen Fitzpatrick of Aristotle Atlantic Partners is Read More
- People with as little as 10 percent of their wealth in the market who lose just 10 percent stand an increased risk of dying early, or suffering health problems such as high blood pressure and depression, finds a study published in the American Economic Journal.
- A market loss as little as 1½ percent (which can happen on an almost daily basis during periods of higher volatility) correlated with a .5 percent increase in fatal car crashes, a second study
- A 25 percent market decline corresponded with a spike of over 5 percent in admissions to California hospitals for mental health conditions like anxiety, panic attacks, and major depression, according to third study.
How can losing money in the stock market lead to health problems and early death? When people unexpectedly lose money they often feel strong emotions such as anxiety, anger and frustration that can take a toll on their physical and mental health, Pamela says. The effect is likely magnified when market losses are larger, and for older investors nearing retirement.
“Market volatility is a fact of life. If you have money in the market, there is no avoiding the ups and downs,” she says. “We had two market corrections of 10 percent or more last year.”
Pamela can share ways to diversify retirement savings so you don't have to risk your wealth – or your health.
“You could get an effective annual return of 5-7 percent over time, but without the risk of stocks, bonds, real estate or other volatile investments,” she says.