I Can Be Wealthy Podcast
Salena Kulkarni is an Amazon best-selling author and a Chartered Accountant. She's spent the past decade helping investors to shortcut their timeline to financial freedom using alternative investment strategies. Tune in to the podcast as she explores ideas, tactics, and strategies for how business owners can become financially free using alternative investing strategies in a fast and safe way.
I Can Be Wealthy Podcast
Should Financial Loss Be Avoided at All Costs? | Ep 187
In this episode, we talk about reframing your relationship with financial loss so that it doesn't negatively impact your confidence or future investing success.
We also discuss the importance of mastering the art of comeback, the psychological impact of loss aversion, and why avoiding financial loss at all costs can be a misleading strategy.
Enjoy the episode!
TIME STAMPS:
00:00 - Intro
03:22 - How People React to Loss and Impact on Decision-Making
04:41 - Warren Buffet’s Investment Mistakes
06:31 - How to Cope With Investment Losses
11:06 - Outro
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Losing money in investments can be devastating, whether you lose $40 or $4 million.
The emotional and psychological impact can profoundly affect your confidence, decision-making, and future success.
So, in this article, we'll explore how to reframe your mindset around losses so they don't negatively impact you.
The Meaning We Assign to Losses
Human beings attach meaning to events, especially negative ones like financial losses.
Even though we live in modern times, our brains still operate in an evolutionary "survival" mode.
So, when an investment loss occurs, it feels like a massive blow to your confidence and abilities.
You may start doubting yourself, making it mean something bad about who you are.
This type of thinking can paralyse you from taking future risks or learning from your mistakes.
If left unchecked, self-doubt can impact your psyche in cancerous ways.
So, it's critical to digest losses healthily without letting them define you.
Examining Your Reactions
When hit with a loss, how do you typically react?
Do you beat yourself up or become suspicious of future opportunities?
Sit quietly and examine your past responses.
Think about the emotions and stories you told yourself.
How did the loss influence your next moves?
This self-reflection builds self-awareness so you can catch damaging thought patterns.
The Myth of Avoiding All Losses
Popular wisdom states that losses should be avoided at all costs.
But this isn't realistic or helpful.
Even legendary investors like Warren Buffet have made multi-million dollar mistakes.
Other top investors have lost their entire fortunes only to rebuild them from nothing.
The truth is that losses are inevitable if you are taking investment risks, which are required for growth.
The real key is ensuring your wins outweigh your losses over time.
Avoiding losses can't be the focus - it's about mastering the art of the comeback.
Learning From Both Wins and Losses
Rather than hiding from losses, digest them fully.
Analyse what biases or issues led to the loss so you can adjust going forward.
Do the same after wins, too.
Reflect on what factors created your success - was it luck or smart thinking?
By reviewing all investment outcomes, you'll better understand your strengths, weaknesses, and thought patterns.
This enables wiser decisions aligned with who you authentically are.
Final Words
Reframing your mindset is essential for handling investment losses in healthy ways.
Stay self-aware, learn from both wins and losses without judgment, and remember that setbacks are part of the game.
Master your inner world, and outer results will follow.