Why you shouldn’t feel bad about losing money during a market crash

Back in February most of us underestimated the impact the coronavirus would have on the stock market and all of our everyday lives. 

It started in China, a place geographically and culturally so far from us. Then it exploded in Italy, reminding us that all that Made in Italy (fashion and more) actually requires buyers and sellers to meet in person regularly.

Even during lockdown global cultures are surfacing, proving how differently we all deal with it. Here in the UK people are going against the rules playing football outside in the sunshine, but not quite as much when the weather becomes colder. People with insecure financial situations who are afraid of losing their jobs ask ‘friends’ to come watch their kids in their homes, although they are not part of their household, but at least they can be online and work.

A Russian friend told me that in Kazakhstan the army are parking tanks in the streets to ‘remind’ citizens to be obedient. Could be a scene from a James Bond film. My friend and I agreed it wouldn’t have quite go down the same way here. 

While the US are dealing with a president who likes to tell others he is doing ‘a great job’ no matter what, most European countries are sending out police to enforce rules and give out penalties as high as 600 euros in Spain.

One toddler is proving challenging for us, I cannot imagine homeschooling a couple of kids! Right now I feel like I will count this period as a success if we survive and don’t mess up my 3-year-old who is already showing signs of stress from not hanging out with her friends and fear of abandonment.

And despite pay cuts for both of us, we are lucky we both still have jobs. Even secular jobs like dentists and non-hospital doctors are now in serious financial trouble as people postpone non-urgent procedures. And you know the world is changing when key workers now include supermarket staff and journalists (incl. all those behind them from the make-up artists to the IT people making sure the servers don’t go down).

I think a lot of people will seek psychological support in a few months.

Losing money is hard

I lost lots of money. Most people have. To be more precise I have a substantial unrealised loss, after all I don’t need to sell my assets. Phew!

Losing money is hard for all of us, even for those who claim online not to be concerned by it. Maybe they will easily survive, but no one likes to lose money. Currently I’m going through these feelings:

1. Guilt: it was going so well in the last many months, I put more into my Stocks & Shares ISA instead of keeping more of it in cash. I still have enough of an emergency fund, but in the future I will make it a priority to have at least 9 months worth of cash. This is a problem exacerbated by the fact that I can’t get my money out very fast at all from my peer-to-peer with Funding Circle. And why am I not holding more bonds? 🤦

2. Frustration: I was so happy Vanguard finally offered a private pension service in the UK and went in immediately. But of course the transfer took a few weeks (in all fairness they were actually rather quick…) but those were precious weeks and I lost a good deal of money there too. Then I took a few days to calm down emotionally before rebalancing my portfolio based on Millennial Revolution’s advice… only to see the market go up by the time I bought back in… Financial Independence is a little further away now.

3. Impostor syndrome: I’ve had an interest in money and investing for years, to the point that I blog about it! I claim to know something about this, yet I lost money. To overcome this impostor syndrome-driven shit feeling I now read as many FIRE blogs as I can. Many of the well-known FIRE folks out there claim to not have lost money – but when you look at the details, they mean over the course of months if not years, not just a few days or weeks. We cannot time the market, stuff like this happens, so let’s try to cope as well as we can with this impostor syndrome. If that doesn’t make you feel better, even great FIRE folks like The Fire Starter and Mr RIP resigned from their cushy jobs just weeks before the coronavirus made the market crash. I’m happy to report Mr RIP is sounding much more positive now than a month ago, hopefully TFS will feel the same soon.

Lessons learnt

These are the lessons I learnt so far:

1. Stick to the FIRE rules, girl! Keep your expenses low, save and invest a large part of your income, and have an emergency fund.

2. Panicking does not help. Whatever happens, panicking will only make it worse. We are putting extra effort into remaining pragmatic and controlling what we can control, from social distancing to washing your hands sooo often and reducing our expenses.

3. Don’t be greedy, keep it simple. We all want to make money, but don’t go and overcomplicate simple stuff.

4. Be kind and look after family and friends. They are the ones that will look after you when you’re in need.

Other random thoughts

• Talk to your spouse or life partner regularly about how you can optimise functioning together especially if you have kids. That is valid for childcare, both working from home, cleaning your place yourselves, and everything else you can think of. We are learning new rules and we all need feedback.
• Now is the time to make and share with your spouse or life partner a list of ALL our bank and investment accounts. And to make or update your will.
• The most common side hustles we know of are now… inaccessible. Include that possibility in your financial calculations.
• There is a large new home development nearby that we visited because we are curious people interested in what is going on in our area. Being on their newsletter list they kindly let me know that they are offering a ‘stamp duty discount’ up to nearly £170,000.
• Yesterday I wandered into the side streets for my one-hour government-sanctioned walk. 4 people greeted me. In London! And I even encountered an urban fox now roaming the streets undisturbed during the day.
• If you need cheering up, there is some tremendous humour here.