5 reasons why the stock market got you stressed and 5 things you can do about it
It happens to everyone who takes risks. Even gamblers know how it feels. As the popular saying goes, every crisis presents an equal or better opportunity. You should not feel sorry for yourself or start blaming other people. Moving out of your comfort zone is the best decision you ever made.
In his first-quarter letter to investors of Greenlight Capital, David Einhorn lashed out at regulators. He claimed that the market is "fractured and possibly in the process of breaking completely." Q1 2021 hedge fund letters, conferences and more Einhorn claimed that many market participants and policymakers have effectively succeeded in "defunding the regulators." He pointed Read More
Investing in the stock market is a huge risk. And huge risks present bigger rewards or some of the best lessons to learn. The reason why you are stressed right now is you’ve committed a number of investing mistakes.
Fortunately, this is the best way to learn so that you won’t repeat next time. Today, we are going to discuss these investment mistakes that are getting you stressed and the best ways to handle them and recover. Every successful investor made these mistakes when starting out. But they did not give up. And so should you. Let’s get started!
1. Failing to understand your investment
According to edu birdie, you should never invest in something you don’t understand even if the terms and conditions are favorable. This means that you should not be buying shares in companies whose operations or business models is not clear to you.
One of the best ways to avoid investing in businesses you don’t understand is building a diversified portfolio of mutual funds or exchange traded funds. If you decide to invest in stocks, choose the companies you understand best.
2. Falling in love
Have you ever fallen in love with a company? Most of us have at one point in time. It happens when someone invests a fortune in a company. The problem with falling in love is, it makes you blind. You’ll start looking at the positive side every time instead of being practical.
Remember, you invested money in a specific company to make a fortune; not to fall in love. Being practical will help you understand the fundamentals and make informed decisions.
3. Lack of patience
How many times have you found yourself ignoring the slow and steady progress for quick fixes? It happens all the time not only in investing but also in other activities. For instance, it’s easier to take weight loss or body-building supplements than hit the gym. It’s easier reading a quick summary of a book and seek law assignment help than read the actual book from cover to cover and write an essay. But, do these short term solutions work in the long run?
Everything worthwhile takes time. A slow and steady approach is better than a big loss in the long run. Having realistic expectations and goals is the first step towards cultivating patience. As the popular saying goes, patience pays. Your investments, just like seeds, need time to grow and mature.
4. Investment turnover
Assignment help reports that jumping from one type of investment to another is one of the stressful and time wasting activities to participate in. Unless you are comfortable with low commission rates, you should avoid this habit at all costs. Not to forget the transaction costs which will deplete your gains and investment.
5. Getting even
Have you ever found yourself thinking of getting even after making a loss? It’s natural to crave for what you had. However, you should be calculative and focused on the future. Sticking around may lead to more losses. Do not wait until the stocks becomes worthless.
If you invested in the wrong company, you can always make changes and improve your results. The best way to avoid making more losses is setting a minimum target. Keep in mind that getting even arises as a result of fear or greed. Do not let your emotions cloud your thoughts. Keep the bigger picture in mind.
So, how can you avoid making the mistakes we’ve discussed above? Here are some of the best ways to go about it.
1. Have a plan of action
Where are you in the investment cycle today? Where do you want to be in future? Knowing your goals clearly and what you need to do to get there is a prerequisite for success. Without a clear destination, any road will take you there. If you get stuck somewhere, you should consult a reputable financial advisor as soon as possible.
Remembering why you are investing money in the first place can be enough to keep you going through tough times. Also, you should eliminate expectations of getting rich overnight. As the popular saying goes, easy come easy go. The best thing you can do for yourself is create a long term investment strategy that is consistent.
2. Automate your plan
As your income grows gradually, you may want invest more. It’s always important to analyze your investments regularly. You can do this at the end of every month, quarter or year depending on the nature of your investment.
Again, it’s important to seek help whenever you get stuck somewhere. Automatizing your plan will save you a lot of time and money in the long run.
3. Set some money aside
When we receive our paycheck, we get tempted to spend all the money and borrow a little more. Having more things is the desire of every human being. Majority of people don’t fight this urge. They go with it and end up angry and frustrated in the end.
Setting aside some money which should not exceed 5% of your investment portfolio is one of the best ways limit your losses. You should avoid using retirement money. Investing in a reputable firm will pay in spades in the long run.
4. Know when to make the sell
Investing in stocks is a long term commitment. Understanding how the stock market operates takes some time. So, how do you know if it’s the right time to sell your stock? Should you wait a little longer to get even? If you are getting stressed out because of the stock or it has lost its appeal, you should definitely sell it.
5. Diversify your investments
While investing in stocks plays in the long run, it’s important to diversify your investments. Diversifying your investments will help in maintaining your financial stability and security. Instead of putting all your eggs in one basket, put them in several baskets to reduce the risk.
If you’ve been having problems with your investments, you probably know the cause of it by now. You can avoid repeating the same mistakes by following the tips discussed above.
About the Author
Michael Gorman is high skilled freelance writer and proofreader from UK who currently works at resumewriters and essay writing services. Being interested in everyday development, he writes various blog posts for BestEssay and discovers new aspects of human existing every day by looking for essay writers for hire. He can be reached 24/7 via Facebook and Twitter.