Overcoming failures to achieve financial success

Y parents and some of my dad’s friends used to invest in the stock market. At that time, they were lured into investing a significant amount in IPOs. Unfortunately, they lost a big part of their investment. But more importantly, they lost their appetite to learn more, and be open to investing further. Similarly, I also tried investing and somehow failed to earn at the start.

It was in 2008 when I made my first investment. At that time, I just learned about mutual funds from some financial forum and decided to give it a try. I invested P30,000.00 in one of the mutual funds offered by a reputable financial services company. A few months after, the global financial crisis happened. In less than a year, I lost 40 percent of my investment. Being a first time investor, I panicked. I knew it was paper loss, but decided to just stop investing more.

Though my parents and I were in an almost similar situation when we started investing, we had our differences in how we handled losing our investments. My parents stopped investing, while I, on the other hand, shook off the trauma of losing my investment for about a year and read more articles about the different investment instruments and how I can benefit from them. I eventually continued making regular investments a year after the crisis.

Just like any other endeavor in life, failing/losing money can be part of investing. The key, however, is not how many times you fail, but how open are you to learning and pushing yourself to take one more step closer to succeeding. In case you’ve started investing and have lost money, here are some tips that can help you move forward and continue investing:

Learn why you are losing money. I lost money because of the financial crisis. I had to learn about such a crisis the hard way. There are a lot of factors that can make our investments lose money; in investment terms, these are called risks. Assess the causes why your investment lost money and look for different safety nets on how can you prevent this from happening again in the future. Investments are not guaranteed; thus, the general rule is that the higher the potential return, the higher the risks as well.

Reassess the type of investment inSTRUMENT fiT FOR YOUR PROfiLE. A lot of firsttime investors I know dove into investing in the stock market and relied merely on tips from other stock market traders/investors. Obviously, without proper study, they lost money and may seem to be in “paper-loss” mode for a long time. Stock market investing for one requires a lot of research and analysis that will eat up much of the investor’s time.

CONSULT A fiNANCIAL planner. Many of us are afraid to consult a financial planner because we are afraid of being offered a financial product. There are a lot of independent advisors, like Registered Financial Planners, that can help you understand your investment options and give you advice on how you can move on from your investment losses. Ideally, financial planners should also ask for your goals, so any advice or action would be a step closer to achieving the goal.

Create an investment plan. When one wants to get into a business, he/she usually comes up with a business plan as guidance. The same should be done prior to investing. An investment plan would guide one in 1) the type of investment instruments to have for the goals to be achieved and 2) the strategy to different risks that come with the chosen investments. The plan can include different diversification strategies, when to preserve profits and when to cut losses.

Every investor, even the successful ones, has their wins and losses. What made them successful was how they dealt with the losses as they moved on. Losing money in investments can be painful experience, but just like in life, every experience shapes us to become better and gets us closer to what we want to achieve. The only time you fail is the time you give up.

If you want to know more about how to achieve financial success, you can join the 12th Financial Fitness Forum that is happening on April 13, 2024. The event will feature the top Registered Financial Planners in the country who will share their invaluable insights and tips on personal financial planning. This event will not be possible without the support of IMG, Kaiser, Manila Bankers Life, Rampver Financials and Atram.

Jeremy Jessley Tan is a registered financial planner of RFP Philippines. To learn more about financial planning, attend the 107th RFP program this May 2024. Please email info@rfp.ph or visit rfp.ph for details