I hear this complaint frequently from many friends and peers: “The future seems so uncertain, how would I ever dare to invest my money?” Something could go drastically wrong — disaster could strike, a war might break out, or a full-blown recession may engulf the world in despair and turmoil once again. With so many possibilities of what may go awry, how can investors reconcile this with investing for a bright future?
The argument here is that times have always been uncertain, and we are not living in a special era where this is more true now than in previous generations. In fact, with rising standards of living, sanitisation, antibiotics, and improved levels of knowledge and awareness, we should actually be declaring that uncertainty has been vastly reduced instead!
When it comes to investing, a proliferation of high-speed computers and smartphones provide us with all the information we need, at our fingertips, in order to make wise investment decisions. Yet, people hold back from investing due to the inherent uncertainty present in this world. Let’s take a closer look at what this entails.
Uncertainty is a core part of our existence
For many millennia, the human race has had to deal with uncertainty and unpredictability in a world full of random events. Investing is no different, as the business world is full of twists and turns, defying attempts to predict what might happen. More than ten years ago, smartphones did not even exist, while more than a century ago, air travel was practically a fantasy. No human being has been able to predict or anticipate such changes with any amount of certainty.
Dealing with emotions related to uncertainty
Investors need to learn how to cope with emotions surrounding uncertainty so they don’t hinder us from doing what is right for our financial health. It is certainly normal to feel worried, nervous, and even stressed when faced with uncertainty, but we have to remember that the goal of investing is to earn a decent return above inflation. With this in mind, we need to grit our teeth and soldier on.
Forging ahead with our investment plans
Uncertainty is actually a boon in that it creates favourable valuations for long-term investors to purchase great companies. While other investors stay away or sell their holdings because they are worried and jumpy, astute investors with a calm, rational mindset are able to take advantage of this behaviour to increase their investment holdings.
Rather than letting uncertainty ruin our investment plans, we should turn the tables instead and embrace the advantages uncertainty affords us. This way, we can ensure that our investments have a greater margin of safety in case anything goes wrong.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.