Editor: Crass Cash
People love it when the stock market goes up. If you're a value investor you love it when the market falls. One thing you can be sure of is the market will either be going up or falling. The psychology of dealing with this can be absolutely essential. If you sell during a fall you'll miss out on the rebounds. During a bull market your brain can become euphoric. Dealing with both scenarios requires emotional intelligence EI.
If you want to retire much earlier than anybody else or if you want to retire at all and not outlive your money. You're going to need to have a certain attitude. When you fill out a personal investment analysis in order to determine your "risk tolerance" they'll want to see how you handle volatility. Selling when the stock market falls 50% can be disastrous!
I know people who do nothing but stick money into a savings account at 0.01%. They have no risk tolerance, I get that. But they're going to be working for decades longer than if they find some alternative investment that nets them at least 3-4% more than that. If you're one of these types of people YOU MUST LEARN TO DEAL WITH MORE VOLATILITY!
The way to do this is mentioned above. When the market changes direction, change your attitude. When it goes up, great! You're getting richer! When it goes down, great! You can buy more at a lower cost. It's like BOGO at the store! Practice this attitude/mindset change every day. Bear markets can last for years, so start small. When the market drops for a day, cheer. When it drops for a week, cheer. When it drops for a month, cheer. When it drops for a quarter, cheer. When drops for a year, cheer!
That way when the market drops 50-70% next time (it will in the next 4 years) you'll be the one running into the burning building, while everybody is running out...
I know people who do nothing but stick money into a savings account at 0.01%. They have no risk tolerance, I get that. But they're going to be working for decades longer than if they find some alternative investment that nets them at least 3-4% more than that. If you're one of these types of people YOU MUST LEARN TO DEAL WITH MORE VOLATILITY!
The way to do this is mentioned above. When the market changes direction, change your attitude. When it goes up, great! You're getting richer! When it goes down, great! You can buy more at a lower cost. It's like BOGO at the store! Practice this attitude/mindset change every day. Bear markets can last for years, so start small. When the market drops for a day, cheer. When it drops for a week, cheer. When it drops for a month, cheer. When it drops for a quarter, cheer. When drops for a year, cheer!
That way when the market drops 50-70% next time (it will in the next 4 years) you'll be the one running into the burning building, while everybody is running out...
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