How to Recover from a Stock Market Loss

Let’s talk about how to recover from a stock market loss or investment loss here. So I’m going to talk about four main parts with this here. First we’re going to talk about emotional. Now we’re going to talk about spending, investments in general and then the plan. So the first is the emotional part. You know when you have a loss like this, a financial loss even if it is just on paper if you will. And see that balance go from point A to point B, a lesser value, it’s normal to feel hurt. To feel like you have a loss, to be frustrated. And it’s also normal to feel like you have to take action and do something. But before we take action and do something irrational, let’s walk through a few things first. One, think about spending. Do I need this money right now or in the very near future? And if I do, it probably should have been invested differently to start with. But are there other things I can do to maybe look at using another resource before having to sell this at a loss? Or if this is money that I’m using as income, maybe I’m retired can I wait maybe on that spending or can I do something different? So again, if spending this particular money is important, we have to look at this a little bit differently. From an investment perspective, keep in mind this first, so if I have a 10% loss, I’m going to need about 11% gain to get my money back. If I have a 20% loss, I need about 25% to get it back. A 30% loss, I need 43% or so to get that back. And what if I had a 40% loss? Well boy, I need a 67% gain just to get back to even. So again, when we’re looking at investing, make sure you understand those risks associated with the various investments that you have so you know. Losses are always something that potentially can happen when we’re investing depending upon what you’re doing. It brings me to my last point here, stick to your plan. Whenever we’re having investments, it should fit into a bigger overall picture. Whether that’s a retirement plan if that’s what we’re focused on. Saving for something specific like a maybe a home purchase or down payment or college or something like that. So make sure you have a plan mapped out. One of when you’re going to need this money, but how is this invested and also so you have this risk tolerance picture in place for you. So you’re not surprised or blindsided by these larger losses. Again, if you’re concerned about this or if this is recently happening to you with this market loss or investment loss, give us a call at the number on the screen. We’d love to sit down with you, walk through this and see if we can help you, so you can plan to retire well.