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Keeping the faith when an investment fails

Keeping the faith when an investment fails

Last updated 5th Aug 2022

Investment is absolutely essential to those who want to grow their wealth and achieve financial independence. But, as any seasoned investor will tell you, it’s not for the faint of heart. Every day starry-eyed new investors come to the table looking to grow the wealth they’ve inherited from parents or to make a particularly generous bonus more meaningful. And the sad truth is they might as well take their money to Las Vegas. Yes, there’s always an element of chance in the world of investment, but investors can always educate themselves in order to ameliorate the risk and increase their chances of significant returns.

Sadly, however, there will always come a time when even a seasoned investor takes a bum steer. When a seemingly golden opportunity quickly devolves into a hot potato that you can’t throw away quickly enough. When an investment fails, it’s easy to become demoralized. You can lose some or virtually all of what you invested and wonder why you even bothered. 

However, just because you’ve struck out doesn’t mean you should never come back to your seat at the table. Here are some tips for keeping the faith when an investment fails…

Remember your “why”

We all have personal goals that we need to expand our personal wealth to achieve. You might want to be able to work less and spend more time with your family. You may fantasize about retiring early or investing in a beautiful vacation home in a Golfing Community. You might want to leave a legacy for your kids or travel the world while you’re still relatively young. 

Whatever your “why”, it should be the reason why you dust yourself off and return to the table. Besides, you won’t be the same investor anymore. You’ll have been changed by your experience.

Think of what you learned from the experience

Even if you made a significant loss in monetary terms, that doesn’t mean that you haven’t gained anything. Every cloud has a silver lining and yours will be the lessons you learned from your investment failure. Instead of shutting your misfortune out of your memory, lean into it. Pick through the rubble and try and determine what went wrong and when. Ask yourself what you will do to prevent this from happening again.

Make changes to your strategy

Failure is the best teacher. When you return to the world of investment, you will likely want to make strategic changes based on your learning experience. You might want to be a little less bullish in your investments, even the ones that seem like a sure bet. You might want to put your eggs in more baskets or invest in more non-traditional commodities. Changing your strategy can help you to feel more in control and prevent you from making repeat mistakes.

Learn from the successes (and failures) of others

Finally, you aren’t the first to be stung by a bad investment and you certainly won’t be the last. Read about the success stories (and the failure stories) of others. Warren Buffet, for example, famously only ever invests in what he knows… Which is why he reads a library’s worth of books every year. 

The more you learn, the better informed your strategy and investments will be.

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