Ukraine, Inflation, Stock Losses And Times Of Investment Fear
Published Wednesday, March 2, 2022 at: 8:08 AM EST
The first war in Europe since World War II, rampant inflation, and a -1.55% stock market decline in stock prices today, dropping stocks back into -10% correction territory today. Today’s headlines are frightening, which makes this the right time to talk about investment fear.
Turmoil in the world, economic setbacks, and financial volatility can spark financial fear and anxiety in moments like this. This is a reminder that the most important thing you can do is talk about it with a professional.
"Talking about your financial fear helps process what’s happening," according to Dr. Frank Murtha, founder of the Financial Counseling Institute. "Talking is a constructive way of recognizing, understanding, and reacting to your fear. Keeping it inside causes anxiety. "
According to Dr. Murtha, personal financial fear has the power to evoke a full spectrum of human emotions, from panic to irrational exuberance and everything in between.
"Fear is the most influential of all emotions," he says. "Financial fear and anxiety can be chronic conditions if you are paying down a large debt, caring for a family member, living in fear of running out of money in retirement, or facing myriad other uncertainties."
How you experience fear is partly dependent on your brain. The brain’s fear center, the amygdala, triggers three reactions to fear – perhaps not surprisingly -- all "f words:" fight, flight, freeze.
Fight is an instinct that probably came in handy when humans lived in caves. It is not useful in modern day financial dealings, however. Fighting might make you double down on a bad investment and could cause a bigger loss.
Flight -- selling an investment to remove yourself, retreat to safety, and regain control of your situation is another reaction to investment fear. However, you know that you must put up with stock risk to earn long-term returns in your financial plan.
Freezing is another natural reaction in times of rising fear -- literally, becoming too afraid to do anything! You are unable to make a decision and find a way out from anxiety.
Talking with a professional is a smart step toward restoring a sense of control and eliminating anxiety.
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This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
This article was written by a professional financial journalist for McCarthy Asset Management, Inc and is not intended as legal or investment advice.