What lessons can be learned from the Great Recession about investing?
How should I invest my money in an unstable economy?
How do I invest my money for a secure retirement?
What lesson can we learn about investing from the Greatest Recession?
For many, the fear and panic from the investment losses they experienced in 2008 and 2009 still grip them. While the power of these emotions can’t be ignored, we should not let emotion compromise our financial futures.
Now that we are more than five years past the beginnings of the “Great Recession,” we have more perspective and can see more clearly. We can examine the facts and the evidence and draw some valuable lessons that can help us — as investors — stay focused on our long-term goals.
Here are some of the lessons to be learned:
- Don’t let emotions drive investment decisions
- Don’t try to time the markets
- Active managers do not consistently outperform in bear markets
- Diversification still works
- Don’t take unnecessary risks with bonds
- Rebalance your portfolio regularly
- There may be no better alternative to buy-and-hold investing
Though we all have different goals, dreams and life circumstances, these seven lessons can apply to all of us, from day to day and year to year, across both bear and bull markets.
LESSON ONE – Don’t let emotions drive investment decisions.
Letting your emotions guide the way you invest can have detrimental consequences for your portfolio, including dramatic underperformance. It is easy to understand how this happens. Our instincts tell us we have to do something now. Indeed, studies have shown that, time and again, investors tend to invest according to recent performance. When the stock market is going up, we tend to believe it will continue to go up, and we are driven by the desire to buy. When the market goes down, we are afraid it will continue to decline, and our fear causes us to want to sell.
To view the complete Wealth Guide titled: Greatest Investment Lessons From The Great Recession, click here: