By Clayton Daniels, author of Fund Your Ideal Lifestyle

I remember when I first started trading stocks. Before the likes of Raiz came around, the only way to access the market was through a broker. These brokers had minimums of $500. As a uni student a decade ago at 23 years of age, that $500 minimum was a confronting minimum.

My emotional investment was high. If the stocks went up, I was elated. If the stocks went down, I was devastated. It was only at the end of a few years of this type of investing – which of course didn’t end up all too profitable – did I learn how unbeneficial it was to be emotionally invested in my investments.

Because when investments go down, it doesn’t automatically equal a bad result. It’s a bad result if you need the money straight away, but if you don’t, all it means is you now get to purchase more of the asset at a discount.

This is counter intuitive I know, but it is how the ultra rich get richer. When the GFC happened, there was a massive transfer of wealth from the middle class to the upper class because the middle class sold down at the exact time they should have been buying.

At the end of the day, if you are investing, you are accepting that what you are buying is a fair price. If your investments temporarily go down, then you should be buying in these moments. This very simple investment strategy is called ‘buying in the dips’.

If you are emotionally investing, this does not make sense. But this is why being in control of your emotions during your investment career is so important. When the roller coaster happens – as it will every year of your investment career – take the opportunity to buy more. If you ultimately believe the world will continue to produce value, and continue to earn a profit, then ultimately the stock market will go up again, and so will your investments. Especially if they are invested across indices such as with the Raiz portfolio

If your only response to a falling market is ‘sell sell sell’, then perhaps you shouldn’t be in the market. Again, I know this is counter-intuitive, but your investment goals should be to control your emotion, and buy more when the stock market goes down, not the other way around.

We all need reminders of this every now and again, and as we have seen some roller-coaster action as of late, I figured this was a timely reminder.