If you’ve ever regretted an investment decision, don’t worry – you’re far from alone, the results of a survey of more than 1,100 investors by MagnifyMoney show.
You’d think people would give big money decisions a sober second thought, but some don’t even give them a sober first one. Close to one out of three respondents (32 per cent) admitted to trading whilst under the influence. That rate rises to 59 per cent for Generation Z.
Two out of every three investors admit to regretting an impulsive or emotionally charged investment decision. The rates are high throughout the age spectrum but especially so with Generation Z (85 per cent) and millennials (73 per cent). Generation X has a 60 per cent rate whilst baby boomers come in at 54 per cent.
Consumers who self-manage their portfolios tend to have a harder time making clear investment decisions compared to those who rely on a financial advisor. The lone wolves report higher rates of lost sleep and regret than those using a professional. There are other effects too, as 37 per cent of investors admit to losing sleep over the state of the markets and 30 per cent have cried about their investments. The three top reasons for crying are the loss of money (43 per cent), the feeling of being overwhelmed (36 per cent) and selling too early and therefore missing out (34 per cent).
To avoid the pitfall of emotion (or inebriation) the authors suggest three steps, leading off with taking a long-term view and not riding the wave of every rise and dip. Set up a regular plan and contribute to it.
You should also identify your tolerance for risk. Don’t invest money you need for your expenses, and when investing what is left know what strategies you are most comfortable with.
Also consider working with a professional. You can still conduct your research and make some plays but have the professional there to guide you and advise you on the markets and trends.