For many people, money is an emotional issue. Fears and anxieties tend to impact the way you think about your finances. If you want to grow your wealth by investing in the stock market, you’ll need to face your fears first.
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Jaspreet Singh, host of “The Minority Mindset,” has some great insights about overcoming stock market anxiety. In a recent YouTube video, he offered his best tips for reluctant investors to overcome their worries. And if you’re already an investor, these facts are still very relevant! Learning is a lifelong endeavor, especially for investors.
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Accept That the Stock Market Can Be Completely Crazy at Times
Sometimes the stock market looks like a wild thing. As Singh put it: “Crazy happens.” The Dow rises one day and then plummets the next. Individual stocks soar and fall unpredictably. Take the example of Meta: Over the course of one month, the stock fell from a value of $539 down to $453. The stock’s value later rose again to $521.
The market’s dramatic ups and downs can be, well, scary. Inexperienced investors sometimes get so alarmed by market fluctuations that they dump their stocks instead of waiting out the storm. This is an error, but it’s a common one.
Even Warren Buffett made this mistake as a first-time investor, panicking and selling his stocks after he watched their value plummet. Those same shares later soared in value, teaching Buffett that it’s not a good idea to sell stocks because of a momentary change in value.
The takeaway: With experience, investors learn that dips and crashes in the stock market are normal and do not indicate a major stock market downturn. Instead of dumping stocks, hold on and wait through the downturn.
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Use Patience To Build Wealth
Singh said the real opportunity of the stock market “is only there for the people that actually understand patience.”
Experienced investors know how to take the long view. The stock market crashes on a semi-regular basis, with 20% dips, or “bear markets,” happening every 5.5 years or so. Over time, though, the top stocks in the market, represented by the S&P 500, have consistently increased. Allowing for inflation, the S&P 500 has increased at a steady rate of between 6.5% and 7%.
In other words, instead of panicking over every shift in the market, remember that some level of volatility is completely normal and doesn’t mean that anything is fundamentally wrong. Smart investors know to hold on patiently through dips and crashes instead of selling off shares at a loss.
The takeaway: It takes time and patience to build wealth. Ignore daily market fluctuations, which usually level out…
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