Money Behavioral Mistake #3. Fear of Regret

Fear of Regret. Closeup portrait of disturbed woman. Emotional young lady squeezing cheeks with her hands. Doubtful, scared facial expression.
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When one door closes, another opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.

Alexander Graham Bell

Fear of regret may drive someone to buy the latest “hot stock” because of the fear of missing an opportunity.

Regret, is a strong human emotion, and it can come into play with money, and how one invests. It may also keep an investor from entering the market after it has generated a series of losses, which leads to a tendency to buy high and sell low. Regret is more than experiencing the pain of a loss.

Regret involves the pain of feeling responsible for the loss.

Fear of Regret. Thoughtful business woman piggy bank with

Investors can avoid not only the loss but the feeling of regret if they can hold on to a poorly performing stock until it gets back to where he or she bought it. Of course, this may not be the best investment decision because some stocks never come back. Usually, there is more regret associated with taking an action that turns out poorly than with not taking an action that would have benefited the investor.

Regret is more than experiencing the pain of a loss. Regret involves the pain of feeling responsible for the loss.

This is why we may put off making any decision at all because of the fear of regret.

Fear of Regret. little boy and girl tired stressed exhausted with toys scattered indoors, kids bored being home

Any decisive action may prove to be less than optimal or an outright mistake. For example, regret may be experienced when a stock takes off and the investor either did not buy it or sold it before the price increase.

Another great quote from Mark Twain is

Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do.

Next. Read about Money Behavioral Mistake #2. Overconfidence (or Optimism Bias)

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