It's understandable, but...
I’ve had several people contact me in recent weeks. People scared of losses. It’s understandable. It’s part of the human psyche, embedded into our neurobiology over millions of years.
Our survival depended on our ability to keep what we had toiled to achieve as hunters and gatherers.
The Nobel prize winning economist Daniel Kahneman (in conjunction with his colleague Amos Tversky) first identified it in 1979.
They gave it a name: Loss Aversion. They demonstrated that people are much more motivated by a fear of loss than any gains. And so overthrew the classic economist view of humans as rational maximisers.
The truth is much closer to the statement by neuroscientist Antonio Damasio.
“Humans are feeling machines that think.”
Loss Aversion is an irrational, fear-based response. Emotions cloud judgement and can be very expensive.
Risk, the potential for losses, is inherent in any investment. Even cash at the bank is losing money at the moment because of inflation.
Investment returns are the reward for risk.
And in your financial plans, they are rationally calculated, and evaluated in a basket of probabilities. So that the probability of success outweighs the risk.
The only path to growth involves risk and the calm, cool head of reason.
This is just a moment in time.
It too will pass.
Do you have enough to enjoy the retirement you deserve? If you are worried, I am happy to offer a complimentary Personal Financial Health Check, whether or not you are a client. Where we can review your personal finances and discuss some ideas about your financial planning goals.
To find out more call 02 4926 7100 or book your appointment here.