Overcoming Investor PTSD

Feeling out of control? Paralyzed by the economic swings recently and over the last ten years?

You or someone you know may have a form of Post Traumatic Stress Disorder.  PTSD is most commonly associated with soldiers returning from war, but any overwhelming life experience can trigger a mild case of PTSD.

No doubt the economic crisis three years ago qualifies as an overwhelming life experience for many of you.  If you had money in the stock market, it is likely you have felt helpless or out of control in recent years.  The Great Depression shaped an entire generation, and the Great Recession may do the same.

My dad retired 14 years ago. He was fortunate to work at a company that provided a great ESOP (Employee Stock Ownership Plan).  He and many of their employees were able to retire at a relatively young age because of that retirement plan. He has informed me that a former co-worker recently went back to work because of what the stock markets had done to their investment portfolio. Wow!! Imagine not working for 10-15 years and then having to start over in the latter years of your life?  This may be an extreme example but one that nearly every investor fears when they invest and live off of their retirement savings.

My wife is a psychologist.   Without letting her know I was writing about this topic I asked her “What are some of the treatments used to help people with PTSD?”  Some of the notes I took down were…..Exposure – facing the anxiety of the trauma….Don’t continue to avoid any kind of reminders….Recognize you could be or are in a safer place. These are only a few of the keys to overcoming it but they are a start.

Any investment carries risk, including stuffing your retirement savings in your mattress. But there are tools to help investors manage risk smartly. Over the next few posts, I hope to help educate you on the different ways to think about risk. PTSD does not have to be permanent. The key is letting go of the past and to start making better choices today.

Ed Meek, CFP®.