Get Used to It: Investing Means Sometimes Losing Money
Why you must pair investing with stoicism
I’ve lost money. Some were significant losses. Some were small losses. Some were embarrassing (ignorant) losses. Others were standard losses.
As an investor, you will make ignorant decisions and lose money; other times, you will invest wisely and still lose money.
The goal is not to get overly emotionally attached to your money. You must remember that money is a renewable resource; it can be here one second and gone in an instant.
Don’t wear yourself out trying to get rich; restrain yourself!
Riches disappear in the blink of an eye; wealth sprouts wings and flies off into the wild blue yonder (Proverbs 23:4–5, The MSG)
Whenever you lose money, it doesn’t mean you will never have money again. It’s simply gone until you develop a strategy to reel more of it back.
Investing is all about profits and losses. You win some. You lose some.
Pair Investing With Stoicism
I’m naturally an unemotional investor, but stoicism has helped me become even less emotional.
As an unemotional investor, you allow yourself to weather financial storms that take many people out of the investing game.
Ultimately, you can’t step out of the investor game if you want to build wealth. Wealth requires some kind of investing; which investment avenue you choose is entirely up to you, but saving your way to wealth will never allow you to reach your maximum financial potential.
Words I think to myself during bull and bear markets are as follows:
Bullish: “Oh, the markets are high. Cool.”
Bearish: “Oh, the markets are low. Cool.”
How the markets are doing matters less if you’re a long-term investor. If you’re a short-term investor, how the markets are doing doesn’t have to matter as much if you prudently hedge your bets.
Losing Money Isn’t the End for You
The following reading is from one of my favorite books that I routinely study called The Daily Stoic by Ryan Holiday:
Let fate find us prepared and active. Here is the great soul — the one who surrenders to Fate. The opposite is the weak and degenerate one, who struggles with and has a poor regard for the order of the world, and seeks to correct the faults of the gods rather than their own.
Whatever happens today, let it find us prepared and active: ready for problems, ready for difficulties, ready for people to behave in disappointing or confusing ways, ready to accept and make it work for us.
Let’s not wish we could turn back time or remake the universe according to our preference. Not when it would be far better and far easier to remake ourselves.
It’s a normal reaction to get emotional, sad, stressed, anxious, pessimistic, despondent, or depressed about significant financial losses.
Take a moment to sit in the loss, but don’t stay there long.
What to Do After Financial Losses
For people who hate losing money or have to start over due to significant losses or poor financial decisions, consider pairing your investment strategies with stoicism.
Practice being less emotional.
Instead, get creative and optimistic.
Learn new skills and strategies to help increase your income and available investment resources.
Acquire new knowledge to help you avoid future losses and to experience financial gain.
Summary
It’s not the end of the world if you lose money.
It’s not the end of the world if an investment strategy fails.
It’s not the end of the world if you don’t have any money at retirement age.
Instead, this is the opportunity for you to remake yourself and implement new creative strategies that help you pivot into financial success.
You might think you can’t afford to invest because you’re barely surviving financially as is.
You might think investing is pointless if you’ve incurred considerable losses.
However, investing is a proven and pre-dated strategy to build wealth.
If you’re going to invest, get comfortable with losing money; it’s part of the process, but over the long haul, your profits will outperform your losses.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
I always say that investing comes down to minimizing risk, not maximizing ROI. Risk and, therefore, potential losses are part of the investing game.