*This article was originally posted on the Financial Post on August 29th. The original piece can be found by clicking here.*
I learned a lot this summer, especially while biking on a training ride for the Sears National Kids Cancer Ride 2014: I was hit hard by a car in Fergus, Ont., and, suddenly, my life changed.
Although there wasn’t a “life flashing before my eyes” moment, I was lucky to escape with only a damaged hand and a completely destroyed bike. How does any of this relate to investments? Here are five reasons:
1. Check your insurance
Insurance often gets a bad rap in the investment world, but your family is going to need some financial support if you are taken out by a car (or die unexpectedly).
Everyone knows insurance is cheaper and easier to obtain when you are young and healthy, but few do anything about it. We are not insurance experts, but we have been forcefully awakened to the benefits of having some. Get some insurance before it is too late.
2. Investing is a family affair
Being a so-called expert in the financial world means that my spouse has never needed to pay much attention to any of our investment strategies.
If my crash had been worse, she would have found herself looking after a hodgepodge of hedge funds, U.S. stocks, exchange-traded funds, real estate and other investments (we cannot buy new Canadian securities because 5i Research is conflict free).
There are some investments she certainly would not be familiar with and might have mishandled. Because of my background in the investment world, we do not have a financial advisor in the typical sense.
I learned a lesson here: make sure your investments are a family affair.
3. Remember why you are investing
Lying in the street awaiting an ambulance, I was at least happy that 30 years of investing prudently meant that — even without insurance — my family was probably going to be okay if I did not make it.
I haven’t gambled (much) with investments over the years and never panicked in the various market crashes (1987, 1997, 2001, 2002 and 2008, to name a few), but always keep in mind why you invest in the first place. It is not always about you.
4. Diversification is always important
Diversification in stocks reduces your overall risks and is a key investment tenet. It also allows you to recover from a crash.
The same is true with life: When my beautiful Vitess bike was destroyed, I knew I had two temporary bike replacements in my basement, and two indoor bike trainers as well (which were very much needed since I had to have hand surgery and could not train outside for six weeks).
I was able to — after a brief stint in hospital — continue with my coach’s plan to keep training for my charity trip across Canada in September.
5. You need to move on
After my crash, I was angry with the driver of the car that hit me and depressed about my injuries. But, like when you pick a losing stock, this really doesn’t accomplish anything.
Getting mad at losing money takes away valuable energy that you could use to find something better in order to make back your loss.
After a few days of depression following my crash, I simply carried on. I got a new bike, trained indoors with a cast on my arm in July, and forced myself to bike outside (with the cars) in August.
If you have a losing investment, simply accept it, learn from it and move forward. Lamenting over the loss gets you nowhere.
If you experience a crash, be it stock market, cycling or otherwise, use it as a lesson. Learn from the experience and get back out there.
Comments
Login to post a comment.