Buyer’s remorse is real
and doesn’t only happen to regular shoppers. Investors
who have been in the market for quite some time have too felt guilt when
they’re focused on short-term results, and that feeling worsens when they see
the price of their investments starts to drop.
The question now is how
to stay objective and keep yourself from feeling investor’s remorse and what
steps you should take if you have it. To get started, here are three tips you
can consider.
Fix Your Mistake
Immediately
Poor investing
decisions have consequences and, therefore, should be fixed as soon as
possible. The longer you wait to correct them, the more serious the
repercussions you may have to face.
Avoid applying trigger
prices or waiting for certain economic or market events before making a move.
Timing the market can only fuel emotional investing, potentially putting you in
a more financially difficult position.
Instead, figure out a
practical, effective way to recuperate what you lost without using the markets
as your basis. That doesn’t mean you need to sell or buy back immediately.
Rather, it’s more about fixing your investing error based on how a particular
investment has performed since you purchased it.
So if your current
situation makes a certain investment unsuitable for your portfolio, you can
sell it. Likewise, you can repurchase the investment if it fits your long-term
goals.
Readjust Your Portfolio
Risk
An emotional investing
decision is usually due to a strategy that doesn’t match your risk tolerance.
Some investors had found themselves taking on more risk than they would like
when they sold an investment too early.
You can prevent such a
situation from happening to you by reallocating your investment dollars into a
moderate portfolio. With the right strategy, you can avoid the urge to sell
when the market is down or make changes that will eventually cause you to feel
remorse.
Investor’s remorse
sometimes occurs when market players make choices and don’t see results right
away. However, you need to remember that investing is a long-term activity.
Therefore, you should be on the lookout for opportunities and not stress
yourself out on minor issues.
You don’t need to worry
significantly about what happens in the short term, as long as the changes in
your portfolio align with your long-term
goals. So rather than focusing on quick results, turn your attention to
developing a strategy that can help you make it through daily market
volatility.
Get Help If Necessary
Working with a
financial advisor would be an excellent option, especially if you often make
emotionally-driven investing decisions. However, make sure to get help from a
fiduciary.
Fiduciaries are legally
required to act in the best interest of their clients, making them more
reliable than a broker or dealer who is not legally required to do such a
thing.
But if the financial
harm you’ve experienced needs legal action, you may need to consider a more
serious type of assistance. Filing a lawsuit may be best if the individual who
sold you the investment may have committed a crime.