Trustnet Magazine 86 July 2022 | Page 60

IN THE BACK

Uncertainty plays on our minds , leading us to seek methods of reducing risk . By doing that , we are also reducing our potential returns

There are worries that rampant inflation will do what Vladimir Putin and the coronavirus couldn ’ t and push equities into a sustained bear market . Herein lies the first big issue human beings have as investors rather than savers . We are psychologically vulnerable to uncertainty . We don ’ t seem to mind if our cash is gently eroded by the forces of inflation , because it ’ s stealthy and the amount of money we have on paper doesn ’ t appear to change . But a stock market correction creates real havoc , as portfolio values dip alarmingly . It feels like we have lost real money , and we wonder if our investments will ever climb back to the value we bought them for . Who knows ? This could be the moment when stock markets slump for good . This uncertainty plays on our minds , leading us to seek methods of reducing risk . By doing that , we are also reducing our potential returns , and in the longer term that can dent our confidence in the concept of investing . The most common problem investors encounter is buying high and selling low . When the markets
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