Stay Calm and Invest More: How to Not Panic When Boom Goes Bust
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If you want the best financial advice, then follow this simple rule: Buy in gloom and sell in boom. Yet so many of us do the opposite and buy in high markets and panic when the balloon bursts. If you sell your investments when they have reached an all-time-low, you are losing money.

So why do we do that? Why do we panic when the market falls and sell our investments for a tiny proportion of their previous value? We know the market will rise again, so why are our memories so short and our pockets so shallow? Any sound investment planning should take into account the fact that markets will rise and fall, financial speculations fall in and out of favour. So how can you make sound financial choices that won’t fail?

Remove Non-Experts From Your Financial Life

The media, your neighbours, and your parents will all offer you financial advice, and most of it is a very bad idea. In a period of gloom, the media try to portray that the financial world is ending.They have interviews with emotional people who have over-extended themselves, purchased risky shares, and now they are homeless and penniless. They talk to people that have had thousands of dollars disappear from their stocks and share values (never mind that in a month or two they will have regained their value). The media do this because they want you to watch the news, to read their articles, and watch their advertising so they make more money. Don’t buy into it.

Your neighbours and friends will offer you advice about what has worked for them. It’s based on their situation, and their limited knowledge of the market. Unless they happen to have made millions on the share market, it’s a bit like a couch potato offering you advice on how to run a marathon: well-intentioned but profoundly unhelpful.

Your parents will give you the benefit of their mistakes and history. After all, they lived in a time where investing was primarily in land, not with the options we have now. They also purchased their houses when the average purchase price was 2.5 times their salary, and now the value can be up to ten times the average salary, so their advice is largely going to be defunct. Things have changed.

If you need genuine educated advice, seek financial advice from an appropriately qualified financial adviser.

Remove Emotion from Financial Decisions

Following on from removing the terrible advice that everyone will want to give you, you need to make decisions about your money based on fact, not emotion. While you can (and should) incorporate ethical concerns into your decisions, emotion-led decisions are a recipe for disaster. Human emotion is contagious, and if everyone around you is panicking, you need to remain cool, calm, and collected.

It can be difficult to look at your retirement fund and see that it’s lost $1000 in a week. Resist the urge to sell. If you take your money out now, you won’t ever have an opportunity to buy at this low price again!

Warren Buffet said ‘Games are won by players who focus on the playing field — not by those whose eyes are glued to the scoreboard.’ So take your eyes off the scoreboard, and take a look at the whole game.

Saving Never Goes Out Of Fashion

When the market is in boom, sit and watch the market. Don’t buy anything. Save as much as you can and when the market downturns, you’ll be ideally placed to buy a bargain. Seeing an investment such as shares skyrocket in price can be quite compelling to make you want to hop on the bandwagon and buy too. Resist. This is when you should be selling, not buying.

Investing is for the Long Haul

If you make sensible, low or medium risk investments, there may be periods of slump or slow, but there is always going to be an upward trend in value. Selling your investment in gloom is a knee-jerk reaction which may be short-sighted. This slump could be just a blip, a correction, a minor adjustment.

For many types of investment the rule that markets will fluctuate – they will go down and they will come back up – is generally a safe assumption.However, high risk investments may not always play by the same rule – hence they’re high risk. These are a gamble in which you could win big… or not. Your investment planner can help you to create a portfolio of investments which take into account the various risks and will recommend investments that allow you to sleep at night no matter what happens.

Get Educated and Weigh Up the Facts

The sure-fire way to remove emotion from the equation is to get educated about the current situation. Understand the terminology, the factors at play, and WHY the current situation is happening.

So What Do You Do When The Market Slumps?

Don’t Panic

Stick to your financial plan and take further investment advice. The world is an incredibly uncertain place, but it’s the job of financial advisers to understand, predict, and manage fluctuations in the market. They’ve been here before and they’ll be there again, and they can recommend if it’s worth pulling your funds or investing more.

Find Opportunities

If you been patient, saved, and waited for the perfect moment- this is it. Look for investment opportunities, whether it’s a house for sale or a share price that’s plummeted. Seekinvestment advice as an investment planner may have some opportunities they’ve been keeping an eye on.