On our last episode, we broke down the 5 cycles of investor anxiety: fear of the future, information overload, track record investing, emotional decision making, and breaking the rules. Today, we’ll discuss some solutions to this cycle of stress.
When people can put the worries of money behind them, they can focus on the important things in life. The reality is that money is the fuel for our life plans. Money can cause a lot of worries. The first phase, the fear of the future, is usually focused on the worry of having enough money to live now and in years to come. Common threats are health problems, inflation and of course stock market drops.
Fear of the future can lead to an over-reliance on media and the news and seeking a prediction. But nobody knows the future. Who would have guessed at the end of last year a war in Ukraine or a baby-food shortage?
This “information overload” can lead stressed investors to invest based on a fund or stock’s recent track record. You always see the people claiming they guessed the 2001 or 2008 recession or the bitcoin boom. But people can’t beat the stock market forever. Listen to the coin flipping comparison Don Makes. Emotional-based decisions leads to breaking the basic rules of investing.
So, how do we break free from this cycle of anxiety? Firstly, we have to eliminate speculation. What is causing someone to continually make bad decisions? Investors must stay away from stock picking, timing the market, and chasing performances.
The stock market reacts to news and news is unpredictable, this makes the market also unpredictable. This is why diversification, understanding your risk, and working with a holistic advisor is so important!
Don makes a great comparison of investing to the weather in New York City vs San Diego.
Join us today as we explore how to break the cycle of investor anxiety and the benefits you’ll see once you do so.
If you have any questions for Don reach out at (732) 784-2867 or firstname.lastname@example.org.
Listen to the full episode to learn more or skip around to certain topics.
[0:35] – This past Memorial Day
[4:40] – Phase 1
[7:02] – Phase 2
[8:56] – Phase 3
[13:19] – Phase 4 & 5
[15:52] – How do we break the cycle?
[18:12] – Change your news up!
[18:45] – Maximize returns, minimize risk
[20:50] – Let others be emotional
[21:55] – Hire a holistic planner