To lose or not to lose

In the past decade, a few significant events happened that would definitely change the world today. I would be focusing on a couple. The first is the stock rally up until 2008. This is caused by the greed of people believing that there is a free meal everywhere. It made "investors" become over-optimistic. Then comes the crash. It is when everything started to unwind up until today where, even though experts say we are out of it, we are still feeling the effects in many areas of life.

There is 1 important factor to be emulated that can make you in a better position than most. We need alot of discipline and patience to make it work though. The factor to take into consideration is the preservation of capital. This means that we should not invest in anything that can guarantee high returns but also can make losses. We should invest in a financial instrument that can guarantee the preservation of capital invested even though the returns are lower than other financial instruments.

There is a psychological study that proved that the happiness derived from a 100% increase in wealth is at a much lower level than the sadness when you have 100% decrease in wealth. Hence, it would be more painful to lose money than make money through investments.

To ensure a good nights sleep, we should all do a bit of research and ask the right questions before investing to ensure our capital is preserved.