The Mental Rollercoaster of a First Investment

drfabiogiacometti
Aug 6
3 min read

Updated: 7 days ago

Most first-time investors follow a remarkably predictable script. It usually starts with a burst of unshakable optimism — armed with a few YouTube videos, a friend’s hot tip, and the unspoken belief that this is going to be easy. They enter the market convinced they’ve uncovered the secret sauce to wealth creation, blissfully unaware that what they’re holding is a ticket to the financial equivalent of a theme park ride.

The journey begins with soaring highs, dips into doubt, climbs back into confidence, and plummets headfirst into panic. It’s thrilling, terrifying, and — for the unprepared — often expensive. The real punchline? Many of these investors only think about actually learning how investing works once they’ve reached phase seven of the journey: the “Learning & Maturity” stage. By this point, the market has already delivered a crash course of its own, generously charging real money for every single lesson. And unlike a proper course, there are no slides, no handouts — and definitely no refunds.

What follows is the anatomy of that emotional and psychological rollercoaster — seven distinct phases that every unprepared investor is destined to ride at least once. Recognising them might not stop the ride, but it could save you from buying the most expensive education the market has to offer.

Sadly, it was only after the last phase that people realised that a financial course could be helpful.

1. Excitement & Optimism (“This is my chance to grow wealth!”)

Bias involved: Overconfidence Bias
The person feels empowered. They’ve read a few articles, heard stories of successful investors, maybe even watched a couple of YouTube videos.
They believe they can “beat the market” or have found the perfect investment.
Danger: Underestimating risk, jumping in too fast, skipping research.

2. Doubt & Decision Paralysis (“What if I make a mistake?”)

Bias involved: Loss Aversion and Status Quo Bias
As the reality of parting with money sets in, fear creeps in.
Most people fear losses more than they value gains (prospect theory).
They may delay action to avoid discomfort — even if staying out of the market has long-term opportunity costs.

3. Confirmation & Commitment (“I found the right investment, it feels good!”)

Bias involved: Confirmation Bias
After choosing an investment, the person looks for information that confirms their choice and ignores conflicting data.
They might become emotionally attached to the decision, especially if it came from a friend, influencer, or personal research.

4. Anxiety & Monitoring (“Why is it going down? Should I sell?”)

Bias involved: Recency Bias and Myopic Loss Aversion
The investor begins checking their investment daily (or hourly).
Short-term losses feel disproportionately painful.
Even a small dip can cause panic — leading to selling too soon or making rash decisions.

5. Panic or Regret (“I knew this would happen…”)

Bias involved: Herd Behavior and Regret Aversion
If markets drop or the investment performs poorly, regret kicks in.
Seeing others sell may create a herd mentality: “If everyone’s exiting, maybe I should too.”
They might sell at a loss, just to feel back in control.

6. Relief or Euphoria (“I made money! I’m a genius!”)

Bias involved: Hindsight Bias and Overconfidence (again)
If the investment performs well, they attribute success to their own intelligence rather than luck or favorable conditions.
This can lead to riskier future behavior or doubling down without strategy.

7. Learning & Maturity (hopefully) (“Maybe I need a better plan.”)

After the rollercoaster ride, many investors realize the importance of long-term thinking, diversification, and emotional discipline.
Behavioral Shift: From speculation to investment strategy — possibly with the help of an advisor.

At Banking Advisory we:

Anticipate emotional reactions.
Coach clients to avoid harmful behaviors.
Provide structured, bias-resistant strategies (e.g., automation, diversification, rebalancing).
Reframe losses as part of the long-term journey.