The Problem
Every investor is averse to losses. The desire for higher returns results in many believing that there is an opportunity for higher returns, which is much more than the potential loss. However, so much is the fear of loss that many prefer to postpone their decision to invest than face a loss. Delaying investments waiting for an opportune moment is like the farmer waiting for rains in the year of El Nino. By delaying to invest, you are denying yourself the opportunity to benefit from the potential upside of investments. There are people who simply keep waiting, not realising the fact that once they get onto the train, it will help them reach their destination. Yes, there could be delays and halts, but eventually they will reach their destination. Investments are no different—all you need is a start.
Example
The most common instance is to defer tax savings all the way up to March, instead of putting money throughout the year to save taxes. The opportunity loss by delaying and deferring financial decisions when calculated would be far higher than the presumptive loss that caused the delay to decide.
Suggested intervention
Live your financial life by saving well, investing wisely and borrowing smartly—a lesson that you should stick with for your life. Do not be bogged down by starting trouble or fear of loss. Recollect the moment you were leaning to ride a cycle or swim in the pool—you would have had a fall and had that sinking feeling, only to conquer fear and uncertainty. Immediate outcomes of investments are unknown, but growth is certain, provided you give it some time. Doing nothing with your money is the biggest mistake you could commit to the value of your investments over time.
Tip
Do not fear the outcome of investing money. Invest with a time frame in mind and for a goal which is clearly defined. In doing so, you will slowly get over your fear of losses and also get out of your comfort zone of doing nothing.
