Inspired by Boz' series of finance tip blogs, I sat down earlier this year and wrote a series about investing and making a plan. After the series was complete, I sat on it, pondered it, and realised I simply wasn't experienced enough to fully endorse the plan that I set out. Especially given that the major part of my investing didn't start until this year. Since then, my investment value has tumbled... not to mention the fact that I borrowed to do so, and am paying interest. But here are a couple of ideas that I can share.
1. Don't get emotional when your investment goes down.
2. Don't invest more than you can afford to lose.
Both of those things are related; if you can't afford to lose it and you do, you will be mighty upset about your dire situation. All investments that offer returns come with risk, and you need to be sure you can handle that risk. In my case, I borrowed money to invest in managed funds, thinking the market had already taken quite a dip and would bounce. I'm still waiting for that bounce, and I've lost several thousand dollars in asset value as the market continues to correct itself. Obviously I'd much prefer it had increased by that value instead, but I just shrug at my situation. My plan was for the long term, and the value of those assets has no effect on my income today. Even at the absolute worst, if somehow the entirety of those managed funds drops to zero, I can still afford to make the repayments.
Long term plans (at least 5 years) should have an estimated average return. However, it is important to realise that it is an average. Some years your return might be negative. Other years it might be significantly higher than your expectations. This is how I've managed to remain detached from my losses. This is an off year; there will be others that outperform in the future. If you are going to run around like a headless chicken if your investment goes down by a few per cent, it is probably better to find a lower risk investment opportunity (probably with lower potential returns) for your own personal harmony and wellbeing. Investing is a worthwhile cause, but I wouldn't recommend it to anyone who is going to be stressed about constantly monitoring their assets value. I only ever check mine when I get my quarterly statements.
Note that I'm not a financial adviser or investing guru of any kind. If you want specific financial or investing advice, I recommend seeking a qualified professional.