If you go on holiday and 99.9% of people are nice to you or ignore you, but you get racially abused twice, would you assume the whole country is quite racist?
If you lose money will it feel worse than the thrill of making money?
This one is more than a probably. I know most people feel this way.
So many people lose out long-term due to this reason.
The reason I mention this is that it is human nature to have negativity bias.
That’s why the media make so much money from selling fear.
In terms of overcoming this aspect of human nature I would:
- Spend less time with negative people
- Spend even less time with negative and sensationalist media
- Do a lot of reading on common investment misconceptions. If you learn some basic facts like nobody has lost money investing in the major stock market indexes if they hold for decades, but loads of people have lost to inflation keeping money in the bank, then you will realize that you are fearing the wrong thing.
- As a result of number three, start fearing inaction. For example, what is 2% per year (the amount of money you lose to inflation in the bank in most countries) compounded over 5 years? How about 10 or 20 or 30 years? That is why inflation is the silent killer of wealth…….slow and steady.
- If the S&P500 and major indexes perform how they have done historically, how much money will you indirectly lose long-term?
If you think about things in this way, you won’t stop fearing things, as that is partly human nature.
You will just fear other things. For me, I would be very afraid of keeping a lot of money in the bank earning 0.1% at best, when inflation is running at 2% per year, and assets can do much better than that.
I would be even more afraid if my money was earning more but in most emerging market currency.
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