The Bettr Blog

The penny has finally dropped – I think I know how you are feeling…

Nov 30, 2022 | Brett Investment, Buy and Hold, Coaching, Discipline, Financial Advice, Investing, Knowledge, Living life, Stock Markets, Uncategorized

There was definitely a time when I used to look forward to flying.

The truth is nowadays, I really, really don’t like flying… I find the whole experience a bore. Security lines take forever, you are cramped, the seats are uncomfortable and often you need to take a bus from the terminal to the plane!

But nowadays that’s no longer the worst of it…I now am ANXIOUS about taking off, landing AND especially turbulence!

I know that the odds of crashing are very low – I know I am going to land safely. I know all this but why am I now so twitchy about flying…and what has this got do with how you might be feeling right now??

Palma in October

So firstly, I probably should say I have always fought an innate fear of flying (I get all queasy just watching a parachute jump on TV!).

Flying back from a recent family holiday (with an over the wing seat) I was struck by how anxious I became even with just a small burst of turbulence. My stomach lurched and my eyes immediately shot to the wing of the plane just to check it was still there!!

The odds still surprised me

So when I got home I jumped onto google and typed out ‘odds of dying in a plane crash’. To my surprise and relief, they are a very reassuring 1 in 11,000,000! (1)

To put this into context dying in a car crash has odds of 1 in 5000.

I’m still scared of flying!

But even with my newfound knowledge I still know that the next time I’m on a plane and it hits some turbulence I’ll have that very same reaction – my stomach will lurch, my eyes will shoot to the window…

But I understand better now…

I now get that my (and anyone else’s) fear of flying is illogical. Planes, especially commercial flights in the western world, are the safest mode of transportation available.

And this got me thinking of you guys – my clients – and what you have been going through.

So, if all rationality is lost when I board a plane (even though I know I am going to land safely), I can understand how you might be feeling when the world appears to have turned on its heads and investment markets are crashing down around you!

When we are together, I can coach you. I can teach you statistics. I can even demonstrate you that the market WILL go up over time.

And whilst I enjoy this (and hopefully you do too) I also understand that we humans are driven much more by emotions that simple rationale…especially, especially when markets might be taking a tanking!

Investing involves the whole gamut of emotions – happiness and even euphoria in the good times (when markets are up 30%) – despair and anxiety in the bad times (when markets are down 20%).

These emotions can’t be taught; they can only ever be experienced. And that’s why investing for most people (and for me flying) is hard.

You will have heard me say that the long-term average for the stock market is 10% pa.

You will have heard me say that it never (or very rarely) gives you an actual 10% return in any year.

You will have heard me say that 75% of the time the stock market goes up and 25% of the time it will go down.

You will have heard me say you will have years when it gives a +30% return and then weeks with -10% returns.

You know all this. You get all this. But just in the same way that I know the plane will land safely you know logically and rationally that your portfolio will recover and go onto prosper in the future. You get all this.

But just as landing safely will never resolve the fear and anxiety I feel when I fly…it is natural and normal for investors to worry that markets (and your portfolio) might never recover, and you might end up not having enough money!

As humans our brains are hard wired to be poor investors. Things like FOMO (fear of missing out), anxiety around previous (unrelated) investment experiences, behavioural biases…all get in the way.

But in the same way I’ll continue to fly (because the benefits of being in Palma in October far outweigh my temporary discomfort) as investors we can ALSO look beyond our emotions and seek comfort from the lessons that 100 years of market data gives us.

Experience (and knowledge) has taught me that the actual investment returns you end up EXPERIENCING are nearly always a function of your BEHAVIOUR.

As a proper financial planner my job is to help you understand and accept that emotions are a normal part of the journey – be it as a flight passenger or as investor.

These emotions need acknowledged but (with coaching) smart and rational decisions can be made and even though you still might have those 3 am twitch moments, on waking up, you will also quickly realise that the odds of success aren’t against you…instead they are very much stacked in your favour!

Sources: NOVA | The Deadliest Plane Crash | How Risky Is Flying? | PBS

Disclaimer: This document is intended for informational purposes and no action should be taken or refrained from being taken as a consequence of it without consulting a suitably qualified and regulated person.  It does not constitute financial advice under the terms of the Financial Services and Markets Act 2000. It is not an offer to sell, or a solicitation of an offer to buy, the instruments described in this.

Investments involve risks. The investment return and principal value of an investment may fluctuate so that an investment, when redeemed, may be worth more or less than its original value. Past performance is not a guarantee of future results. There is no guarantee strategies will be successful.