There is no shame in making financial mistakes, but it’s a tragedy not to learn from them. If you measure a lesson’s value in dollars, those you can draw from financial mistakes may be the most valuable. Don’t stew over your missteps – turn them to your advantage by avoiding their repetition.
Let’s examine a few ways to profit from your financial blunders.
You can’t learn the right lesson from your financial mistakes unless you understand the real reasons they occurred. It doesn’t matter whether you were an innocent victim or your own worst enemy – realistic evaluation is the key to avoiding making the same mistake again.
Let’s break it down into two types:
We mean financial and emotional help. Financial help is available in many forms, whether through books, courses, professional financial advisors, lawyers, respected stockbrokers, certified accountants, insurance agents, and other reliable partners. Work through your mistakes with your financial helpers to figure out what you did wrong (if anything) and why your money was vulnerable. You hope to identify all the factors that contributed to your mistake and how to prevent a recurrence.
Emotional distress often follows a significant financial loss. Depression, anger, and despair are only useful if you can re-channel your energy into positive action. Don’t be afraid or ashamed to reach out for professional psychological help.
Did you lose money by investing in an overly risky asset? Did you miss out on a significant gain because you were too nervous about losing? A financial advisor can help you understand your risk tolerance and then show you how to invest accordingly. You can achieve a set risk exposure through diversification, asset allocation, and hedging techniques. The ability to invest with knowledge and discipline may result from hard lessons learned, but that ability can serve you well in the years to come.