Stress & Negativity Leading To Bad Decisions

Every aspect of your life will be easier with a positive attitude.

Marketwatch had a post about stress, financial and otherwise. Surprising to me was that 63% of people surveyed were moderately or highly stressed. Maybe I shouldn't be surprised but I am. Debt is a big source of stress but things to help reduce financial stress and by extension overall stress per the article include knowing financial priorities, being knowledgeable about your portfolio and having a written financial plan.

You can sort out for yourself how much those things could help reduce stress but it generally makes sense, if your financial house is in order, you're not worried about debt and have something of a financial cushion your overall stress will be reduced. When stress is lower you're less likely to make poor financial decisions.

I also believe negativity or positivity is just as important. Call it hippie nonsense if you want but I believe people who are more positive have better outcomes. We all know people who seem to struggle with everyday comings and goings of life, life for them is more difficult. The mundane day to day translates into the bigger life issues related to stress, fulfillment and so on.

I belong to a couple of National Park oriented groups on Facebook and there was great conversation that delved into FIRE, more the independent aspect so much as retiring early. It was interesting to read different peoples' thoughts getting to where they want to be. The comments ranged from tips to save money visiting parks to big picture lifestyle decisions. All through the comments, there were well more than 100, one guy kept coming at people with very negative comments related to what could go wrong with picnic areas, living below your means and so on. He was not attacking anyone, he just was a Debbie-downer.

Kind of tying in the Marketwatch article, when you are a truly negative it is more likely you will see the outcome as negative and make decisions based on that expected outcome. Where markets have been concerned, that has been the wrong outcome to manage towards. When I talk about bear markets going down a lot and then turning higher for no reason to eventually make with only variable being how long it takes, I am seeing the positive conclusion to a scary but normal event. After the lows of the financial crisis, the market only took a couple of years to make a new high. When you know there is a positive outcome out there it makes it much easier to endure large, scary declines and avoid the stress that could lead you to bad decisions like selling after a large decline.

None of this is a substitute for a suitable asset allocation and portfolio discipline but the consequence for someone who navigated the great financial crisis poorly but didn't panic was simply waiting for a couple of years.

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