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.
