Index Investment: The First Barrier You’ll Encounter

Index investing isn’t as safe as you think, is it?

With the new NISA starting, investing in the Okan (All World) and the S&P 500 has become common.
I believe that, in the long run, it is quite an effective means of asset formation.

However, the people who start with an optimistic image encounter a wall at the very beginning.

The net asset value falls.
Unrealized losses appear.

Even though you knew it in your head, when the numbers actually drop, it feels harsher than you imagined.

When there’s news that raises concerns,
those worries suddenly feel all too real.

And then you think:

“Maybe I should just quit.”

Index investing has tended to rise overall when viewed over the long term.

But in the short term, it naturally goes down.
Falling is more natural than rising.

And the real problem is that you don’t know how you will feel about those fluctuations when they happen.
If you only invest in index funds, you continue without ever truly experiencing this “emotion.”

If you only do index investing,
you will go on without many opportunities to feel this emotion.

So, when it does drop sharply,

・you will be scared more than you thought
・you will feel anxiety about the future
・and you may quit

these kinds of things happen.

To prevent these, I have been recommending this for a long time.

“Even if it’s a small amount, please buy individual stocks.”

This isn’t about aiming for profit.
It isn’t about merely enduring.

It’s about understanding your own emotions.

How do you feel when you have unrealized gains?
How do you feel when you have unrealized losses?

You should experience that once within yourself.

Having this experience alone changes your view of index investing significantly.
Even when prices drop, you won’t panic.

When they rise, you won’t get carried away.

The phrase “long-term investing”
will become something you understand not just as a theory, but as a feeling.

In investing, more than knowledge, it is crucial whether you have
“whether you understand your own emotions

that is where the outcomes significantly change.

Therefore, what you should do first is

not to aim for perfect investing, but to know yourself.

If you can do this, index investing will become easier to continue.