The definition of ‘nervous’
Nervous, refers to the investor who is not comfortable with investing and the risks associated with it. Nervous sees very little tolerance for risk. As a result, their return on investment is likely to suffer, because they will invest only in very low-risk, low-return investment. Not taking on more risk, nervous barbarians may not be able to generate the returns they need to achieve goals, such as the ability to retire.
The breaking down of ‘nervous’
In common parlance, the nervous Nellie is too shy or uptight people. If nervous Nelly decides to take a chance on a higher risk, higher return investments such as stocks, they are likely to sell the moment the market ticks down. Investors who sell their holdings when the price decrease may miss some bad moments on the market, but they are also likely to miss lifts.
Nervous and buy high sale low
Anxious investors are as nervous barbarians often buy high and sell low, the opposite of the old investment truism, “buy low and sell high.” The nervous investor who is prone to making rash, hasty moves often buys and sells in the worst of times. Nervous barbarians are often too scared to buy in this position until he grows for some time, which increases the likelihood of decline. And once the position is reduced, the nervous barbarians will often sell before he has a chance to recover. Such conduct leads to a nervous Nelly to record losses on an ongoing basis.
Buy high, sell low behavior nervous barbarians, in combination with the transaction costs associated with constant buying and selling, the reasons for their portfolios fully. From 1992-2011, the average investor had an annualized 20 years is 2.1%, according to Nuveen asset management. This return is worse than almost all of the major asset classes. During this same time period, real estate investment Trusts came back with 10.9%, oil 8.6%, the S&P 500 index by 7.8% and gold by 7.6%, bonds 6.5%, ordinary shares EAFE 4%, and the value of the home 2.5%. Nervous barbarians lived would be much better to put your money into almost any mainstream asset allocation of 60/40, and not touching it for 20 years.
Nervous Barbarians To Hoard Cash
After the financial crisis of 2008, Millennial investors are pouring more money than ever in their 401(K) retirement savings account. The survey bankrate.com 2015 found that 39% of people under the age of 30 cited the funds as their investment vehicle of choice. Those investors probably sacrificing the advantage of a long investment horizon, which allows them to easily absorb the volatility is high on investments in shares in exchange for a higher yield.