No matter what level of income you’re on, a global financial crisis can be extremely stressful. And it boils down to one simple reason; uncertainty. The coronavirus has created a second global crisis, financial stress.
Humans hate uncertainty. In fact, a study in 2016 showed that humans find uncertainty even more stressful than knowing something bad is definitely going to happen. Uncertainty causes a huge amount of stress on the human body. And in the case of financial uncertainty, this stress is usually chronic.
Fighting a few different wars – COVID-19, financial stress, and a financial Crisis.
COVID-19 has caused an immense amount of stress and uncertainly among us. Due to its impact on those with health implications and how easily it spreads. Not to mention the high mortality rates for certain demographics.
But besides the physical uncertainly it brings, this pandemic has also caused extreme financial uncertainty for many. Unemployment rates have skyrocketed as people are being made redundant. Thousands of businesses were forced to shut down and pay cuts were seen across all levels. The financial markets initially fell in panic mode with lows not seen since the Great Depression. And global economies are precariously balancing on the edge of a deep recession.
HNW investors were particularly hit hard by the market volatility, losing out on around $16 trillion in global wealth. While there are always winners and losers in the stock markets. Many high-net worth investors saw their life savings in investments plummet with market lows of more than -30%. Anna Zakrewski, global leader of BCG’s wealth management practice says, that this pandemic could erase more global wealth than 2008 Financial Crisis.
It’s hard to imagine a person that wouldn’t find this stressful.
The implication of stress on your mental and physical health.
Looking back at the impact of the 2008 Financial Crisis, we can analyse the most common side effects of debt and high financial stress on one’s physical health. People with high financial stress are:
- Roughly 1.6x more likely to experience Back or Muscle Tension
2. 3x more likely to get ulcers/digestive issues
3. 5x more likely to suffer from severe depression
4. 3x more likely to get migraines
5. 6x more likely to suffer from severe anxiety
6. Just over 2x more likely to experience insomnia
Poor physical health can also start to affect your mental health – reducing your productivity and making it harder to stay focused or in the right mind-set to make good financial decisions going forward.
There are actions we can take as investors to minimise the risks of losing more money and preserve our wellbeing. Namely, taking control of our own finances.
What can you do to reduce financial stress?
Does managing your wealth feel complicated? When there are pages and pages of confusing data it can be overwhelming for anyone.
The majority of investors are simply in the dark. With greater transparency and relevant simplistic data, you will be able to stay on top of your finances through knowledge and feel reassured again.
Start building your resilience
The first step is to improve your financial knowledge. Being more knowledgeable on a subject is scientifically proven to make you feel less anxious and more ready for an emergency.
Crisis can strike at any point in time – be sure to asses all future outcomes from this point onwards – including the best case and worst case scenario. Evaluate this against your risk tolerance and core investment decisions.
Talk to people, don’t keep all your financial stress bottle in. Share you worries and stress with close friends or trusted individuals, and seek out second, third or fourth opinions from professionals. Having multiple perspectives or notes of advice will make you feel like you always have options and focus more on the future and less on the past.
ARQ is here to help you.
What if you could access your own investment performance analytics tool to monitor your investments and benchmark your performance all on an App? Your own independent and intelligent tool to hold your hand and guide you through complexity. With ARQ "know where you stand and see where you can be".
ARQ provides an innovative service that enables investors to make better informed decisions. For instance, ranking your investment performance according to success and generating actionable insights from vast quantities of data. Your very own personalised solution, acting as your watchdog.
Your health is interwoven with your financial situation. You can and should become the CEO of their own fortunes by relieving stress levels. Therefore, any tool that helps to cure anxiety should be part of one's armoury.
By Catherine Child